Finding Number: 2022-002 Program: Research and Development Cluster Federal Agency Names: U.S. National Aeronoautics and Space Adminstration; U.S. Department of Agriculture; U.S. Department of Defense; U.S. Department of Energy; U.S. Department of Health and Human Services; U.S. Department of Transportation; U.S. Department of Commerce; U.S. Environmental Protection Agency; U.S. Department of Homeland Security; U.S. Department of Interior; and National Science Foundation Federal Award Numbers: Various – as listed on the Schedule Federal Award Years: Various Federal Assistance Listing Numbers: Various – as listed on the Schedule Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (Schedule) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the Schedule and information provided for audit purposes is complete and accurate. Conditions Found The University did not have adequate controls relating to the reporting of expenditures on the Schedule for the Research and Development Cluster. Specifically, the University did not have documented procedures on how to query and analyze expenditure data from the Peoplesoft system and the management review controls over the preparation of the Schedule were not designed to operate at an appropriate level of precision. As a result, during 2023 the University determined that $1,552,891 related to the Research and Development Cluster were inadvertently omitted from the June 30, 2022 Schedule. Additionally, expenditures in the amount of $14,289 related to the National Endowment for the Humanities – Promotion of the Humanities Teaching and Learning Resources (ALN 45.162) had been incorrectly included as part of the Research and Development Cluster. The combination of these errors resulted in a total of $1,538,602 of Research and Development Cluster expenditures being added to the June 30, 2022 Schedule. The University also had incorrectly reported encumbrances, which represent future expenditures that have been obligated but not incurred. Cause In discussing these conditions with the University, they stated the errors were primarily due to turnover in staff responsible for preparation of the Schedule as well as a lack of documented procedures. Additionally, the management review controls in place were not operating at a sufficient level of precision to detect the errors. Effect Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs Not applicable. Statistical Sample Not applicable. Repeat Finding This finding is not a repeat finding in the immediately prior audit. Recommendation We recommend the University implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate
Finding Number: 2022-002 Program: Research and Development Cluster Federal Agency Names: U.S. National Aeronoautics and Space Adminstration; U.S. Department of Agriculture; U.S. Department of Defense; U.S. Department of Energy; U.S. Department of Health and Human Services; U.S. Department of Transportation; U.S. Department of Commerce; U.S. Environmental Protection Agency; U.S. Department of Homeland Security; U.S. Department of Interior; and National Science Foundation Federal Award Numbers: Various – as listed on the Schedule Federal Award Years: Various Federal Assistance Listing Numbers: Various – as listed on the Schedule Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (Schedule) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the Schedule and information provided for audit purposes is complete and accurate. Conditions Found The University did not have adequate controls relating to the reporting of expenditures on the Schedule for the Research and Development Cluster. Specifically, the University did not have documented procedures on how to query and analyze expenditure data from the Peoplesoft system and the management review controls over the preparation of the Schedule were not designed to operate at an appropriate level of precision. As a result, during 2023 the University determined that $1,552,891 related to the Research and Development Cluster were inadvertently omitted from the June 30, 2022 Schedule. Additionally, expenditures in the amount of $14,289 related to the National Endowment for the Humanities – Promotion of the Humanities Teaching and Learning Resources (ALN 45.162) had been incorrectly included as part of the Research and Development Cluster. The combination of these errors resulted in a total of $1,538,602 of Research and Development Cluster expenditures being added to the June 30, 2022 Schedule. The University also had incorrectly reported encumbrances, which represent future expenditures that have been obligated but not incurred. Cause In discussing these conditions with the University, they stated the errors were primarily due to turnover in staff responsible for preparation of the Schedule as well as a lack of documented procedures. Additionally, the management review controls in place were not operating at a sufficient level of precision to detect the errors. Effect Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs Not applicable. Statistical Sample Not applicable. Repeat Finding This finding is not a repeat finding in the immediately prior audit. Recommendation We recommend the University implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate
Finding Number: 2022-002 Program: Research and Development Cluster Federal Agency Names: U.S. National Aeronoautics and Space Adminstration; U.S. Department of Agriculture; U.S. Department of Defense; U.S. Department of Energy; U.S. Department of Health and Human Services; U.S. Department of Transportation; U.S. Department of Commerce; U.S. Environmental Protection Agency; U.S. Department of Homeland Security; U.S. Department of Interior; and National Science Foundation Federal Award Numbers: Various – as listed on the Schedule Federal Award Years: Various Federal Assistance Listing Numbers: Various – as listed on the Schedule Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (Schedule) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the Schedule and information provided for audit purposes is complete and accurate. Conditions Found The University did not have adequate controls relating to the reporting of expenditures on the Schedule for the Research and Development Cluster. Specifically, the University did not have documented procedures on how to query and analyze expenditure data from the Peoplesoft system and the management review controls over the preparation of the Schedule were not designed to operate at an appropriate level of precision. As a result, during 2023 the University determined that $1,552,891 related to the Research and Development Cluster were inadvertently omitted from the June 30, 2022 Schedule. Additionally, expenditures in the amount of $14,289 related to the National Endowment for the Humanities – Promotion of the Humanities Teaching and Learning Resources (ALN 45.162) had been incorrectly included as part of the Research and Development Cluster. The combination of these errors resulted in a total of $1,538,602 of Research and Development Cluster expenditures being added to the June 30, 2022 Schedule. The University also had incorrectly reported encumbrances, which represent future expenditures that have been obligated but not incurred. Cause In discussing these conditions with the University, they stated the errors were primarily due to turnover in staff responsible for preparation of the Schedule as well as a lack of documented procedures. Additionally, the management review controls in place were not operating at a sufficient level of precision to detect the errors. Effect Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs Not applicable. Statistical Sample Not applicable. Repeat Finding This finding is not a repeat finding in the immediately prior audit. Recommendation We recommend the University implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate
Finding Number: 2022-002 Program: Research and Development Cluster Federal Agency Names: U.S. National Aeronoautics and Space Adminstration; U.S. Department of Agriculture; U.S. Department of Defense; U.S. Department of Energy; U.S. Department of Health and Human Services; U.S. Department of Transportation; U.S. Department of Commerce; U.S. Environmental Protection Agency; U.S. Department of Homeland Security; U.S. Department of Interior; and National Science Foundation Federal Award Numbers: Various – as listed on the Schedule Federal Award Years: Various Federal Assistance Listing Numbers: Various – as listed on the Schedule Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (Schedule) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the Schedule and information provided for audit purposes is complete and accurate. Conditions Found The University did not have adequate controls relating to the reporting of expenditures on the Schedule for the Research and Development Cluster. Specifically, the University did not have documented procedures on how to query and analyze expenditure data from the Peoplesoft system and the management review controls over the preparation of the Schedule were not designed to operate at an appropriate level of precision. As a result, during 2023 the University determined that $1,552,891 related to the Research and Development Cluster were inadvertently omitted from the June 30, 2022 Schedule. Additionally, expenditures in the amount of $14,289 related to the National Endowment for the Humanities – Promotion of the Humanities Teaching and Learning Resources (ALN 45.162) had been incorrectly included as part of the Research and Development Cluster. The combination of these errors resulted in a total of $1,538,602 of Research and Development Cluster expenditures being added to the June 30, 2022 Schedule. The University also had incorrectly reported encumbrances, which represent future expenditures that have been obligated but not incurred. Cause In discussing these conditions with the University, they stated the errors were primarily due to turnover in staff responsible for preparation of the Schedule as well as a lack of documented procedures. Additionally, the management review controls in place were not operating at a sufficient level of precision to detect the errors. Effect Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs Not applicable. Statistical Sample Not applicable. Repeat Finding This finding is not a repeat finding in the immediately prior audit. Recommendation We recommend the University implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
Condition: For the fiscal year ended June 30, 2022, we requested that Day One prepare and send us a Schedule of Expenditures of Federal Awards. Requested that the expenditures reported in the SEFA be reconciled to Day One’s accounting records. We reviewed the SEFA and compared them to the accounting records; we noted that the expenditures reported were inaccurate. Criteria: Recipients of federal awards are subject to requirements documented in section of the Uniform Guidance Sections 200.510, 200.502, and 200.302. The criteria for each are as follows: § 200.510 Financial statements (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502.” § 200.502 Basis for determining Federal awards expended (a) Determining Federal awards expended. The determination of when a federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. § 200.302 Financial management (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.The financial management system of each non-Federal entity must provide for (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements…..” Questioned Costs: None Cause: The Organization has not implemented policies and procedures requiring that the Schedule of Federal Awards to complete and accurate. Effect and Context: The Organization reported expenditures that exceeded $750,000 for 2022. In determining the major program to be audited for 2022, the auditor could not rely on the SEFA provided because the SEFA was not complete and expenditures reported were inaccurate. Which could have lead to an inaccurate reporting of federal expenditures for the Organization for 2022. Recommendation: We recommend that management implement policies and procedures requiring all federal expenditures be accurately reported in the year end Schedule of Federal Awards. Management’s Response and Corrective Action Plan: See management’s responses documented on page 46-47.
Condition: For the fiscal year ended June 30, 2022, we requested that Day One prepare and send us a Schedule of Expenditures of Federal Awards. Requested that the expenditures reported in the SEFA be reconciled to Day One’s accounting records. We reviewed the SEFA and compared them to the accounting records; we noted that the expenditures reported were inaccurate. Criteria: Recipients of federal awards are subject to requirements documented in section of the Uniform Guidance Sections 200.510, 200.502, and 200.302. The criteria for each are as follows: § 200.510 Financial statements (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502.” § 200.502 Basis for determining Federal awards expended (a) Determining Federal awards expended. The determination of when a federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. § 200.302 Financial management (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.The financial management system of each non-Federal entity must provide for (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements…..” Questioned Costs: None Cause: The Organization has not implemented policies and procedures requiring that the Schedule of Federal Awards to complete and accurate. Effect and Context: The Organization reported expenditures that exceeded $750,000 for 2022. In determining the major program to be audited for 2022, the auditor could not rely on the SEFA provided because the SEFA was not complete and expenditures reported were inaccurate. Which could have lead to an inaccurate reporting of federal expenditures for the Organization for 2022. Recommendation: We recommend that management implement policies and procedures requiring all federal expenditures be accurately reported in the year end Schedule of Federal Awards. Management’s Response and Corrective Action Plan: See management’s responses documented on page 46-47.
Condition: During our review and reconciliation of the Schedule of Expenditures of Federal Awards (SEFA) as initially prepared by the County, we identified federal programs that were not listed accurately which resulted in federal expenditures being overstated stated by $2,412,977. • Expenditures reported on the SEFA for ALN 16.607 - Bulletproof Vest Partnership Program were $36,810. Actual federal expenditures obtained from the County’s records confirm $0 expended for a variance of $36,810. • Expenditures reported on the SEFA for ALN 21.019 - Coronavirus Relief Fund were $2,376,264. Actual federal expenditures obtained from the County’s records confirm $0 expended for a variance of $2,376,264. Expenditures reported on the SEFA for ALN 97.042 - Emergency Management Performance Grants were $24,864. Actual federal expenditures obtained from the County’s records confirm $24,961 expended for a variance of ($97). Additionally, the County failed to present $500,000 in subrecipient expenditures on the SEFA for ALN 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of the federal expenditures on the SEFA. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. The Board of County Commissioners (BOCC) should review and approve the SEFA in an open meeting. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the Board of County Commissioners conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the Board of County Commissioners and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, and the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The Board of County Commissioners, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of federal funds, will evaluate the processes and procedures currently in place to ensure the accuracy of SEFA reporting and detect potential inaccuracies and/or misstatements. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads, in part, as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S Department of Agriculture (USDA) U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster Coronavirus State and Local Fiscal Recovery Funds Temporary Assistance for Needy Families Cluster CCDF Cluster Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.551/10.561 ($5,801,570,781) 21.027 ($4,895,262,395) 93.558 ($606,030,110) 93.575/93.596 ($941,280,574) 93.775/93.777/93.778 ($18,817,832,850) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: None Finding 2022-010: Inaccurate Reporting of Federal Expenditures Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Temporary Assistance for Needy Families (TANF) Cluster, Child Care Development Funds (CCC) Cluster, Medicaid Cluster, and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2022: Additionally, the following differences were identified relative to amounts provided to subrecipients for the following major programs: Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2022, were erroneously reported as cash basis expenditures for the year ended June 30, 2022: Additionally, we noted in January 2023 IDHS discovered expenditures under its Home and Community Based Services (HCBS) waiver program had not been reported to the Illinois Department of Healthcare and Family Services (DHFS) for claiming under the Medicaid Cluster program since January 1, 2021. As a result, DHFS did not report expenditures totaling $508,822,206 paid by the State during the year ended June 30, 2022 on quarterly financial reports submitted to USDHHS. On July 31, 2023 the State provided a revised SEFA for the year ended June 30, 2022 which included a correction to add the previously unreported $508,822,206 of Medicaid Cluster HCBS expenditures. The addition of these expenditures delayed the completion of the State’s 2022 single audit. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that differences in the amounts of federal expenditures and amounts passed through to subrecipients were due to the Department’s conversion to a new financial accounting system, which included creation of new database queries and reports derived from the new financial system data sources that were used for financial reporting. Possible Asserted Effect: Failure to accurately report federal expenditures prohibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC as required.
State Agency: Illinois Department of Corrections (DOC) Federal Agency: U.S. Treasury Department (TREAS) Program Name: COVID-19 – Coronavirus Relief Fund COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN and Program Expenditures: 21.019 ($190,168,889) 21.027 ($4,895,262,395) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: $219,695 Compliance Requirement: Allowable Costs/Cost Principles and Period of Performance Finding 2022-033: Unallowable Costs Charged to the Coronavirus Relief Fund Program Type of Finding: Material noncompliance and material weakness (CRF) Material weakness (SLFRF) Condition Found: DOC charged subrecipient expenditures to the Coronavirus Relief Fund (CRF) program which were incurred prior to the period of performance. The CRF program was enacted by Congress to provide direct payments to state, territorial, tribal, and certain eligible local governments to cover: (1) necessary expenditures incurred due to the public health emergency with respect to COVID-19; (2) costs that were not accounted for in the governments approved budget as of March 27, 2020; and (3) costs that were incurred during the period from March 1, 2020 through December 31, 2021. During our testing of 19 expenditures (totaling $3,869,083) charged to the CRF program during the year ended June 30, 2022, we noted two expenditures for payments to subrecipients (totaling $219,695) for which the underlying expenditures submitted to the DOC for reimbursement pertained to expenditures incurred by the subrecipient prior to March 1, 2020. As these expenditures were incurred prior to the beginning of the period of performance for the CRF program, they are not allowable costs. Additionally, we noted seven CRF expenditures (totaling $2,007,224) from the 19 tested that were not paid by the State until after June 30, 2022, but were included in the 2022 Schedule of Expenditures of Federal Awards (SEFA). As the State prepares its SEFA using the cash basis of accounting, these expenditures were erroneously reported on the 2022 SEFA. Further, in review of the expenditures claimed under the CRF program by DOC, we noted 69 expenditures (totaling $18,080,783) that were not paid by the State until after June 30, 2022. The State’s 2022 SEFA was not corrected for this error. Further, we noted DOC has not established supervisory review controls over expenditures for the CRF and SLFRF programs at an adequate level of precision to ensure: (1) expenditures reimbursed to subrecipients are within the period of performance or (2) expenditures reported on the SEFA are reported in accordance with the cash basis of accounting. DOC expenditures for the CRF program and SLFRF program totaled $128,426,203 and $304,791,247, respectively, during the year ended June 30, 2022. Criteria or Requirement: The Federal Register Volume 86, Number 10 (dated January 15, 2021) states “the CARES Act provides that payments from the Fund may only be used to cover costs that: 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021.” According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure: (1) expenditures are reimbursed by the State are within the period of performance and (2) are reported on the SEFA in accordance with cash basis of accounting. Cause: In discussing these conditions with DOC officials, they stated that when the expenses were selected for reimbursement, the posting date of the transaction was inadvertently reviewed and used. All posting dates fell on or before June 30, 2022. As noted in the finding, the actual warrant date should have been reviewed and used for cash basis. Possible Asserted Effect: Failure to ensure payments to subrecipients are only for expenditures incurred during the period of performance results in noncompliance and unallowable costs. Additionally, failure to report expenditures in accordance with the cash basis of accounting inhibits the auditors ability to properly determine major programs in accordance with the Uniform Guidance. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-033) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend DOC implement procedures to properly review detail expenditures at the appropriate level of precision to ensure federal expenditures: (1) are within the period of performance and (2) are reported on the State’s SEFA in accordance with the cash basis of accounting. Views of DOC Officials: DOC agrees with the recommendation. DOC will ensure appropriate reviews are completed prior to submission of information related to expenditures of Federal Awards.
State Agency: Illinois Department of Corrections (DOC) Federal Agency: U.S. Treasury Department (TREAS) Program Name: COVID-19 – Coronavirus Relief Fund COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN and Program Expenditures: 21.019 ($190,168,889) 21.027 ($4,895,262,395) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: $219,695 Compliance Requirement: Allowable Costs/Cost Principles and Period of Performance Finding 2022-033: Unallowable Costs Charged to the Coronavirus Relief Fund Program Type of Finding: Material noncompliance and material weakness (CRF) Material weakness (SLFRF) Condition Found: DOC charged subrecipient expenditures to the Coronavirus Relief Fund (CRF) program which were incurred prior to the period of performance. The CRF program was enacted by Congress to provide direct payments to state, territorial, tribal, and certain eligible local governments to cover: (1) necessary expenditures incurred due to the public health emergency with respect to COVID-19; (2) costs that were not accounted for in the governments approved budget as of March 27, 2020; and (3) costs that were incurred during the period from March 1, 2020 through December 31, 2021. During our testing of 19 expenditures (totaling $3,869,083) charged to the CRF program during the year ended June 30, 2022, we noted two expenditures for payments to subrecipients (totaling $219,695) for which the underlying expenditures submitted to the DOC for reimbursement pertained to expenditures incurred by the subrecipient prior to March 1, 2020. As these expenditures were incurred prior to the beginning of the period of performance for the CRF program, they are not allowable costs. Additionally, we noted seven CRF expenditures (totaling $2,007,224) from the 19 tested that were not paid by the State until after June 30, 2022, but were included in the 2022 Schedule of Expenditures of Federal Awards (SEFA). As the State prepares its SEFA using the cash basis of accounting, these expenditures were erroneously reported on the 2022 SEFA. Further, in review of the expenditures claimed under the CRF program by DOC, we noted 69 expenditures (totaling $18,080,783) that were not paid by the State until after June 30, 2022. The State’s 2022 SEFA was not corrected for this error. Further, we noted DOC has not established supervisory review controls over expenditures for the CRF and SLFRF programs at an adequate level of precision to ensure: (1) expenditures reimbursed to subrecipients are within the period of performance or (2) expenditures reported on the SEFA are reported in accordance with the cash basis of accounting. DOC expenditures for the CRF program and SLFRF program totaled $128,426,203 and $304,791,247, respectively, during the year ended June 30, 2022. Criteria or Requirement: The Federal Register Volume 86, Number 10 (dated January 15, 2021) states “the CARES Act provides that payments from the Fund may only be used to cover costs that: 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021.” According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure: (1) expenditures are reimbursed by the State are within the period of performance and (2) are reported on the SEFA in accordance with cash basis of accounting. Cause: In discussing these conditions with DOC officials, they stated that when the expenses were selected for reimbursement, the posting date of the transaction was inadvertently reviewed and used. All posting dates fell on or before June 30, 2022. As noted in the finding, the actual warrant date should have been reviewed and used for cash basis. Possible Asserted Effect: Failure to ensure payments to subrecipients are only for expenditures incurred during the period of performance results in noncompliance and unallowable costs. Additionally, failure to report expenditures in accordance with the cash basis of accounting inhibits the auditors ability to properly determine major programs in accordance with the Uniform Guidance. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-033) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend DOC implement procedures to properly review detail expenditures at the appropriate level of precision to ensure federal expenditures: (1) are within the period of performance and (2) are reported on the State’s SEFA in accordance with the cash basis of accounting. Views of DOC Officials: DOC agrees with the recommendation. DOC will ensure appropriate reviews are completed prior to submission of information related to expenditures of Federal Awards.
State Agency: Illinois Department of Corrections (DOC) Federal Agency: U.S. Treasury Department (TREAS) Program Name: COVID-19 – Coronavirus Relief Fund COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN and Program Expenditures: 21.019 ($190,168,889) 21.027 ($4,895,262,395) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: $219,695 Compliance Requirement: Allowable Costs/Cost Principles and Period of Performance Finding 2022-033: Unallowable Costs Charged to the Coronavirus Relief Fund Program Type of Finding: Material noncompliance and material weakness (CRF) Material weakness (SLFRF) Condition Found: DOC charged subrecipient expenditures to the Coronavirus Relief Fund (CRF) program which were incurred prior to the period of performance. The CRF program was enacted by Congress to provide direct payments to state, territorial, tribal, and certain eligible local governments to cover: (1) necessary expenditures incurred due to the public health emergency with respect to COVID-19; (2) costs that were not accounted for in the governments approved budget as of March 27, 2020; and (3) costs that were incurred during the period from March 1, 2020 through December 31, 2021. During our testing of 19 expenditures (totaling $3,869,083) charged to the CRF program during the year ended June 30, 2022, we noted two expenditures for payments to subrecipients (totaling $219,695) for which the underlying expenditures submitted to the DOC for reimbursement pertained to expenditures incurred by the subrecipient prior to March 1, 2020. As these expenditures were incurred prior to the beginning of the period of performance for the CRF program, they are not allowable costs. Additionally, we noted seven CRF expenditures (totaling $2,007,224) from the 19 tested that were not paid by the State until after June 30, 2022, but were included in the 2022 Schedule of Expenditures of Federal Awards (SEFA). As the State prepares its SEFA using the cash basis of accounting, these expenditures were erroneously reported on the 2022 SEFA. Further, in review of the expenditures claimed under the CRF program by DOC, we noted 69 expenditures (totaling $18,080,783) that were not paid by the State until after June 30, 2022. The State’s 2022 SEFA was not corrected for this error. Further, we noted DOC has not established supervisory review controls over expenditures for the CRF and SLFRF programs at an adequate level of precision to ensure: (1) expenditures reimbursed to subrecipients are within the period of performance or (2) expenditures reported on the SEFA are reported in accordance with the cash basis of accounting. DOC expenditures for the CRF program and SLFRF program totaled $128,426,203 and $304,791,247, respectively, during the year ended June 30, 2022. Criteria or Requirement: The Federal Register Volume 86, Number 10 (dated January 15, 2021) states “the CARES Act provides that payments from the Fund may only be used to cover costs that: 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021.” According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure: (1) expenditures are reimbursed by the State are within the period of performance and (2) are reported on the SEFA in accordance with cash basis of accounting. Cause: In discussing these conditions with DOC officials, they stated that when the expenses were selected for reimbursement, the posting date of the transaction was inadvertently reviewed and used. All posting dates fell on or before June 30, 2022. As noted in the finding, the actual warrant date should have been reviewed and used for cash basis. Possible Asserted Effect: Failure to ensure payments to subrecipients are only for expenditures incurred during the period of performance results in noncompliance and unallowable costs. Additionally, failure to report expenditures in accordance with the cash basis of accounting inhibits the auditors ability to properly determine major programs in accordance with the Uniform Guidance. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-033) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend DOC implement procedures to properly review detail expenditures at the appropriate level of precision to ensure federal expenditures: (1) are within the period of performance and (2) are reported on the State’s SEFA in accordance with the cash basis of accounting. Views of DOC Officials: DOC agrees with the recommendation. DOC will ensure appropriate reviews are completed prior to submission of information related to expenditures of Federal Awards.
Finding # 2022-002 Program - Various, including AL 20.509 ? Formula Grants for Rural Areas ? Reporting Grant Number & Year - Various Federal Grantor Agency -Various, including U.S. Department of Transportation Pass-Through Entity -Various, including Nebraska Department of Transportation Criteria - Title 2 of the U.S. Code of Federal Regulations (CFR) ? 200.510(b) (January 1, 2022) states, in part, the following: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. Title 2 CFR ? 200.302(b) (January 1, 2022) states, in relevant part, the following: The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. On January 18, 2020, the Office of Management and Budget (OMB) issued Memorandum M-20-26, which included the following requirement to identify separately COVID-19 Emergency Acts expenditures on the Schedule of Expenditures of Federal Awards. Additionally, in order to provide adequate oversight of the COVID-19 Emergency Acts funding and programs, recipients and subrecipients must separately identify COVID-19 Emergency Acts expenditures on the Schedule of Federal Awards and audit report findings. Title 2 CFR ? 200.303 (January 1, 2022) states the following, in relevant part: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ``Standards for Internal Control in the Federal Government?? issued by the Comptroller General of the United States or the ``Internal Control Integrated Framework??, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures Federal Awards (SEFA) is properly presented and includes all Federal expenditures made by the County during the fiscal year, including properly identifying COVID-19 expenditures. Furthermore, such internal control plan should also include procedures to ensure Federal reimbursements are properly recorded using a Federal revenue code in the County?s accounting system. Condition -Kimball County does not have adequate procedures in place to ensure the Schedule of Expenditures of Federal Awards (SEFA) is completed accurately and includes all Federal expenditures paid by the County. Specifically, we noted the following errors during our audit: ?Expenditures of $32,031 for Assistance Listing 20.509 were omitted from the County?s fiscal year ending June 30, 2021, SEFA. This was not considered a material error, and it would not have impacted major program determination for the fiscal year 2021 audit. ?Expenditures for fiscal year 2022, originally reported by Kimball County for Assistance Listing 20.509, did not include expenditures of $5,310 actually incurred during the fiscal year. ?Expenditures originally reported by Kimball County for Assistance Listing 20.509 did not identify $55,464 of COVID-19 expenditures separately. ?Federal reimbursements, totaling $23,719, were not recorded to a Federal revenue code in the County?s accounting system. Instead, this funding was recorded to a miscellaneous revenue code. Repeat Finding -No Questioned Costs - None Statistical Sample -No Cause - Administration of Federal awards is decentralized, with each County office operating independently without any centralized reporting procedures in place to ensure all Federal expenditures of the County are accurately reported on the SEFA. Additionally, there is an overall lack of knowledge by County personnel related to Federal reporting and compliance requirements. Effect -Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or failure to audit programs that should be audited. Recommendation -We recommend the County establish written procedures to ensure the SEFA is complete and accurate. Such procedures may include, among other things, a requirement that all offices in the County responsible for administering Federal grants report their grant expenditures, as well as related information, to a single individual in the County with overall responsibility for Federal reporting requirements. That individual should be knowledgeable of all Federal reporting and compliance requirements, and review expenditures provided by each office to ensure all amounts are accurate and include all Federal expenditures of the County. View of Officials -Moving forward the transit office will implement a policy and get training to ensure compliance.
2022-067 The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the Block Grants for Prevention and Treatment of Substance Abuse program were allowable and met period of performance requirements. Assistance Listing Number and Title: 93.959 Block Grants for Prevention and Treatment of Substance Abuse 93.959 COVID-19 Block Grants for Prevention and Substance Abuse Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: 1B08TI083138-01; 6B08TI083138-01M003; 6B08TI083138-01M004; 6B08TI083486-01M001; 6B08TI083486-01M002; 6B08TI083486-01M004; 1B08TI83519-01; 1B08TI084681-01; 1B08TI083977-01 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Known Questioned Cost Amount: $19,959,714 Background The Health Care Authority, Division of Behavioral Health and Recovery, administers the Block Grants for Prevention and Treatment of Substance Abuse (SABG). The Authority subawards federal funds to counties, tribes, and nonprofit organizations to develop prevention programs and provide treatment and support services. In fiscal year 2022, the Authority spent about $67.3 million in federal program funds, $52 million of which it paid to subrecipients. The Authority can use grant funds only for costs that are allowable and incurred during the period of performance, as specified in the grant?s terms and conditions. At the beginning of each federal fiscal year, and whenever the Authority receives a new federal grant, it establishes new cost objectives and allocation codes to ensure expenditures are charged to the proper grants. When the Authority receives reimbursement requests, program managers are responsible for reviewing supporting documentation to determine if the services billed meet the period of performance requirements under the grant. Fiscal managers are also responsible for ensuring that payments are coded to the correct period. The Authority follows the accrual basis of accounting and uses the Agency Financial Reporting System (AFRS), which is the state?s central accounting system, to record federal expenditures. At the end of the fiscal year, the Authority?s federal financial reporting (FFR) unit estimates the amount of outstanding obligations to providers. These amounts are recorded in AFRS as an accrued expenditure for SABG and subsequently reported to OFM for the compilation of the Schedule of Expenditures of Federal Awards. FFR has written procedures for calculating its estimated accruals. The calculation begins by using a spreadsheet that tracks contractual obligations to SABG subrecipients and vendors to determine the total state obligation amount through the end of the subaward or contract, which usually extend past the end of the current state fiscal year. This total is then reduced by the number of actual payments made to the subrecipients and vendors, and is also reduced an additional 2 percent to account for anticipated underspending. The remaining total is then recorded as an estimated accrual for the fiscal year. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior two audits, we reported the Authority did not have adequate internal controls to ensure payments made under the SABG program met the period of performance requirements. The prior finding numbers were 2020-059 and 2021-057. Description of Condition The Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the SABG program were allowable and met period of performance requirements. Year-end Estimated Accruals During the audit period, the FFR unit recorded two state fiscal year-end estimated accruals totaling $19,870,537. The Authority did not retain the obligation workbook used at the time of calculating these estimated accruals. Without this documentation, we were unable to assess the accuracy of the obligated amount. However, the Authority confirmed that the obligation amount used in the calculation included expenditures that were incurred after the state fiscal year. Any expenditures incurred after the state fiscal year has ended are not allowed to be included in an accrual. Furthermore, provider payments liquidated after the state fiscal year are not assigned to the estimated accrual in the accounting system. Therefore, we could not determine if the estimated accrual amount was reasonable and accurately reflected expenditures that occurred within the state fiscal year. Transaction Testing We judgmentally selected and examined two expenditures that were recorded in the accounting system with service months prior to the allowed period of performance for the SABG federal fiscal year 2022 award. We found one of the expenditures (50 percent) was an accrual made at the end of the year with no subsequent liquidation payment. We also judgmentally selected and examined five out of a total population of 24 expenditures made during the SABG federal fiscal year 2020 award liquidation period. We found three expenditures (60 percent) were for indirect charges automatically applied to the award through the Authority?s cost allocation system for activities that occurred after the allowed period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition While the Authority had written procedures for the year-end estimated accrual, management did not ensure that only obligations incurred within the state fiscal year were included. Furthermore, the Authority did not have a process in place to review estimated year-end accruals to verify the reasonableness of the accrual calculation. Additionally, management did not ensure that the cost allocation system only allowed indirect payments occurring within an award?s period of performance to be charged to the grant, and did not monitor sufficiently to detect the improper charges. Effect of Condition and Questioned Costs Without retaining adequate support for the estimated year-end accruals and having a process to verify the reasonableness of the estimated calculation, the Authority cannot reasonably ensure its SABG expenditures are for allowable activities and within the period of performance. We identified $19,870,537 in known questioned costs related to the estimated year-end accruals. For the federal fiscal year 2022 award that opened during the audit period, we identified questioned costs totaling $85,492 for services performed outside the period of performance. For the federal fiscal year 2020 award that closed during the audit period, we identified questioned costs totaling $3,685 for indirect expenditures that were unallowable. In total, we identified $19,959,714 in known federal questioned costs. Without establishing adequate internal controls, the Authority cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Authority: ? Improve its internal controls to ensure estimated accruals are reasonable and supported ? Improve its internal controls to ensure the cost allocation system only charges eligible costs to the grant ? Improve its internal controls to ensure payments are within the award?s period of performance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Authority?s Response HCA concurs in part. HCA acknowledges that the version of the document used to determine year-end accruals was not retained as a supporting document. We also acknowledge that some portion of the accrued amount could have included obligations beyond state fiscal year 2022. HCA does not agree that we cannot reasonably ensure that SABG expenditures are for allowable activities and within the period of performance. Expenditures reported on SABG are prepared based on cash and liquidations and all costs are reviewed to ensure they meet the period of performance. While the year-end accruals may included some amounts beyond the state fiscal year, the amounts accrued were based on four quarters of activity. This would not result in errors in federal reporting or federal cash draws. To question the year-end accruals in their entirety is an overstatement of any potential error that was made. The year-end accruals were solely recorded as estimates, and were not used to make any program payments or draw funds from the grantor. HCA only makes program payments to subrecipients and contractors after receiving invoices which are reviewed by staff, including review that the expenditures are within the grant period of performance. HCA does not agree with repayment of the $19,870,537 questioned costs associated with year-end accruals. HCA also does not concur with repayment of the $85,492 questioned costs associated with an accrual transaction. An accrual was entered in the accounting system based on expected billing. No invoice for the transaction was received for FY 22 grant activity, and as noted in the finding no payment was made. HCA does not draw funds from the grantor until a payment is made, and as a result no funds were drawn for this accrual. HCA concurs with the $3,685 for indirect expenditures that were unallowable for the grant award. An accounting cost center was not correctly updated at the end of the grant period, and as a result some termination leave indirect expenditures were charged to the grant after the period of performance ended. HCA will review processes to ensure cost centers are appropriately closed to prevent unallowable expenditures from being charged to grant awards and discuss repayment with the grantor. HCA notes that of the total $19,959,714 questioned costs, only $3,685 meet the definition of Improper Payments as defined in Uniform Guidance 2 CFR 200.1. Based on preliminary discussions with the grantor, HCA should expect that repayment of questioned costs related to the accruals will not be requested as no funds were drawn. This information was shared with the auditor. Auditor?s Remarks In its response, the Authority acknowledged it did not retain supporting documentation to verify the year-end estimated accrual expenditures were incurred during the state fiscal year. Furthermore, the Authority acknowledged that the year-end estimated accruals likely included expenditures incurred after the state fiscal year. The Authority reports cash and accrued expenditures on the Schedule of Expenditures of Federal Awards and, as such, the accruals are required to be audited. In our judgment, the Authority does not have sufficient processes in place to verify the reasonableness of the year-end estimated accrual calculations. We reaffirm our finding and will follow up on the status of the Authority?s corrective action during our next audit period. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments, which states in part: (2) Where the costs, at the time of the audit, are not supported by adequate documentation. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200, Uniform Guidance, section 502, Basis for determining Federal awards expended, states in part: (a) Determining Federal awards expended. The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients, the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. Title 2 CFR Part 200, Uniform Guidance, section 510, Financial statements, states in part: (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Behavioral Health Grant Unit Procedures, state in part: WHAT IS ACCRUAL: Fiscal year end and end of biennium contract subsequent payments. PURPOSE: To prepare contract accruals for the end of a fiscal year or biennium and the subsequent payment of those invoices by the Behavioral Health Grant Unit. BACKGROUND: Accruals and liquidations are looked at a high-level by program, fund, and fund source (GF-S/GF-F), to see if the agency has over liquidated our authority. Some accruals are based on actual billings/claims, but a good chunk is based on estimates, because of the lag in billings, as well as the amount of contracts per grant; mainly block and SOR. BLOCK GRANT AND SOR PROCESS 1. Create a SFYXX Accrual workbook using a JV workbook template. 2. Pull grant direct expenditure data to date including GL 0159 (liquidations), cash expenditures (6510) and accruals (6505), using your grant Webi criteria. a. We pull in accruals (GL 6505), because we want to see accruals that have already been booked by AP, so we don?t double book them. b. Expenditures paid in the new SFY will automatically need to be accrued since they weren?t paid by the end of the SFY. c. Filter out/do not accrue on any interagency transactions including state universities. Those are processed outside of our unit. 3. Take total SFY of year processing obligations from grant spreadsheet. ? NOTE: For auditing purposes, if one was to reproduce the obligation amount it could change if you refer to the original document later than the date that we established the original obligation amount. Please always refer to the accrual spreadsheet for the obligation amount pulled at the time for the purpose of accruals. 4. Reduce obligation amount by 2% so that we don?t over accrue (The percentage was recommended?due to not spending everything that is obligated.). 5. First pivot to run is to identify total expenditures and accruals for SFY being processed. Use the expenditure amount for the second pivot table. 6. Second pivot to run is to figure out the split out the expenditure between ER and NB, because they are the most common. Calculate the left to accrue amount by taking the obligations with 2% reduction subtracting the expenditures as well as the previous accrual amount. To see what you need to accrue. 7. Third and Fourth pivot tables find the most common PI for each of the subobjects. 8. Fifth pivot table identifies most common org index. 9. Sixth pivot table (SABG)identifies the ER and NB expenditures by allocation, so that they can be accrued by percentage of the total expenditures. 10. Calculate percentages to spread the accrual across ER and/or NB in allocations, per grant. 11. Complete the rest of the workbook following our JV process with obtaining the JV log number, filling out the JV log, adding the explanation and backup data for the upload and release tab. On the JV tab complete the TC to be 736 and include GL 5111. If we need to complete a reversal the TC would be 736R. 12. Upload and email the JV to Supervisor and Lead. 13. Supervisor and Lead review, approve, and release the JV.
2022-067 The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the Block Grants for Prevention and Treatment of Substance Abuse program were allowable and met period of performance requirements. Assistance Listing Number and Title: 93.959 Block Grants for Prevention and Treatment of Substance Abuse 93.959 COVID-19 Block Grants for Prevention and Substance Abuse Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: 1B08TI083138-01; 6B08TI083138-01M003; 6B08TI083138-01M004; 6B08TI083486-01M001; 6B08TI083486-01M002; 6B08TI083486-01M004; 1B08TI83519-01; 1B08TI084681-01; 1B08TI083977-01 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Known Questioned Cost Amount: $19,959,714 Background The Health Care Authority, Division of Behavioral Health and Recovery, administers the Block Grants for Prevention and Treatment of Substance Abuse (SABG). The Authority subawards federal funds to counties, tribes, and nonprofit organizations to develop prevention programs and provide treatment and support services. In fiscal year 2022, the Authority spent about $67.3 million in federal program funds, $52 million of which it paid to subrecipients. The Authority can use grant funds only for costs that are allowable and incurred during the period of performance, as specified in the grant?s terms and conditions. At the beginning of each federal fiscal year, and whenever the Authority receives a new federal grant, it establishes new cost objectives and allocation codes to ensure expenditures are charged to the proper grants. When the Authority receives reimbursement requests, program managers are responsible for reviewing supporting documentation to determine if the services billed meet the period of performance requirements under the grant. Fiscal managers are also responsible for ensuring that payments are coded to the correct period. The Authority follows the accrual basis of accounting and uses the Agency Financial Reporting System (AFRS), which is the state?s central accounting system, to record federal expenditures. At the end of the fiscal year, the Authority?s federal financial reporting (FFR) unit estimates the amount of outstanding obligations to providers. These amounts are recorded in AFRS as an accrued expenditure for SABG and subsequently reported to OFM for the compilation of the Schedule of Expenditures of Federal Awards. FFR has written procedures for calculating its estimated accruals. The calculation begins by using a spreadsheet that tracks contractual obligations to SABG subrecipients and vendors to determine the total state obligation amount through the end of the subaward or contract, which usually extend past the end of the current state fiscal year. This total is then reduced by the number of actual payments made to the subrecipients and vendors, and is also reduced an additional 2 percent to account for anticipated underspending. The remaining total is then recorded as an estimated accrual for the fiscal year. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior two audits, we reported the Authority did not have adequate internal controls to ensure payments made under the SABG program met the period of performance requirements. The prior finding numbers were 2020-059 and 2021-057. Description of Condition The Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the SABG program were allowable and met period of performance requirements. Year-end Estimated Accruals During the audit period, the FFR unit recorded two state fiscal year-end estimated accruals totaling $19,870,537. The Authority did not retain the obligation workbook used at the time of calculating these estimated accruals. Without this documentation, we were unable to assess the accuracy of the obligated amount. However, the Authority confirmed that the obligation amount used in the calculation included expenditures that were incurred after the state fiscal year. Any expenditures incurred after the state fiscal year has ended are not allowed to be included in an accrual. Furthermore, provider payments liquidated after the state fiscal year are not assigned to the estimated accrual in the accounting system. Therefore, we could not determine if the estimated accrual amount was reasonable and accurately reflected expenditures that occurred within the state fiscal year. Transaction Testing We judgmentally selected and examined two expenditures that were recorded in the accounting system with service months prior to the allowed period of performance for the SABG federal fiscal year 2022 award. We found one of the expenditures (50 percent) was an accrual made at the end of the year with no subsequent liquidation payment. We also judgmentally selected and examined five out of a total population of 24 expenditures made during the SABG federal fiscal year 2020 award liquidation period. We found three expenditures (60 percent) were for indirect charges automatically applied to the award through the Authority?s cost allocation system for activities that occurred after the allowed period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition While the Authority had written procedures for the year-end estimated accrual, management did not ensure that only obligations incurred within the state fiscal year were included. Furthermore, the Authority did not have a process in place to review estimated year-end accruals to verify the reasonableness of the accrual calculation. Additionally, management did not ensure that the cost allocation system only allowed indirect payments occurring within an award?s period of performance to be charged to the grant, and did not monitor sufficiently to detect the improper charges. Effect of Condition and Questioned Costs Without retaining adequate support for the estimated year-end accruals and having a process to verify the reasonableness of the estimated calculation, the Authority cannot reasonably ensure its SABG expenditures are for allowable activities and within the period of performance. We identified $19,870,537 in known questioned costs related to the estimated year-end accruals. For the federal fiscal year 2022 award that opened during the audit period, we identified questioned costs totaling $85,492 for services performed outside the period of performance. For the federal fiscal year 2020 award that closed during the audit period, we identified questioned costs totaling $3,685 for indirect expenditures that were unallowable. In total, we identified $19,959,714 in known federal questioned costs. Without establishing adequate internal controls, the Authority cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Authority: ? Improve its internal controls to ensure estimated accruals are reasonable and supported ? Improve its internal controls to ensure the cost allocation system only charges eligible costs to the grant ? Improve its internal controls to ensure payments are within the award?s period of performance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Authority?s Response HCA concurs in part. HCA acknowledges that the version of the document used to determine year-end accruals was not retained as a supporting document. We also acknowledge that some portion of the accrued amount could have included obligations beyond state fiscal year 2022. HCA does not agree that we cannot reasonably ensure that SABG expenditures are for allowable activities and within the period of performance. Expenditures reported on SABG are prepared based on cash and liquidations and all costs are reviewed to ensure they meet the period of performance. While the year-end accruals may included some amounts beyond the state fiscal year, the amounts accrued were based on four quarters of activity. This would not result in errors in federal reporting or federal cash draws. To question the year-end accruals in their entirety is an overstatement of any potential error that was made. The year-end accruals were solely recorded as estimates, and were not used to make any program payments or draw funds from the grantor. HCA only makes program payments to subrecipients and contractors after receiving invoices which are reviewed by staff, including review that the expenditures are within the grant period of performance. HCA does not agree with repayment of the $19,870,537 questioned costs associated with year-end accruals. HCA also does not concur with repayment of the $85,492 questioned costs associated with an accrual transaction. An accrual was entered in the accounting system based on expected billing. No invoice for the transaction was received for FY 22 grant activity, and as noted in the finding no payment was made. HCA does not draw funds from the grantor until a payment is made, and as a result no funds were drawn for this accrual. HCA concurs with the $3,685 for indirect expenditures that were unallowable for the grant award. An accounting cost center was not correctly updated at the end of the grant period, and as a result some termination leave indirect expenditures were charged to the grant after the period of performance ended. HCA will review processes to ensure cost centers are appropriately closed to prevent unallowable expenditures from being charged to grant awards and discuss repayment with the grantor. HCA notes that of the total $19,959,714 questioned costs, only $3,685 meet the definition of Improper Payments as defined in Uniform Guidance 2 CFR 200.1. Based on preliminary discussions with the grantor, HCA should expect that repayment of questioned costs related to the accruals will not be requested as no funds were drawn. This information was shared with the auditor. Auditor?s Remarks In its response, the Authority acknowledged it did not retain supporting documentation to verify the year-end estimated accrual expenditures were incurred during the state fiscal year. Furthermore, the Authority acknowledged that the year-end estimated accruals likely included expenditures incurred after the state fiscal year. The Authority reports cash and accrued expenditures on the Schedule of Expenditures of Federal Awards and, as such, the accruals are required to be audited. In our judgment, the Authority does not have sufficient processes in place to verify the reasonableness of the year-end estimated accrual calculations. We reaffirm our finding and will follow up on the status of the Authority?s corrective action during our next audit period. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments, which states in part: (2) Where the costs, at the time of the audit, are not supported by adequate documentation. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200, Uniform Guidance, section 502, Basis for determining Federal awards expended, states in part: (a) Determining Federal awards expended. The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients, the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. Title 2 CFR Part 200, Uniform Guidance, section 510, Financial statements, states in part: (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Behavioral Health Grant Unit Procedures, state in part: WHAT IS ACCRUAL: Fiscal year end and end of biennium contract subsequent payments. PURPOSE: To prepare contract accruals for the end of a fiscal year or biennium and the subsequent payment of those invoices by the Behavioral Health Grant Unit. BACKGROUND: Accruals and liquidations are looked at a high-level by program, fund, and fund source (GF-S/GF-F), to see if the agency has over liquidated our authority. Some accruals are based on actual billings/claims, but a good chunk is based on estimates, because of the lag in billings, as well as the amount of contracts per grant; mainly block and SOR. BLOCK GRANT AND SOR PROCESS 1. Create a SFYXX Accrual workbook using a JV workbook template. 2. Pull grant direct expenditure data to date including GL 0159 (liquidations), cash expenditures (6510) and accruals (6505), using your grant Webi criteria. a. We pull in accruals (GL 6505), because we want to see accruals that have already been booked by AP, so we don?t double book them. b. Expenditures paid in the new SFY will automatically need to be accrued since they weren?t paid by the end of the SFY. c. Filter out/do not accrue on any interagency transactions including state universities. Those are processed outside of our unit. 3. Take total SFY of year processing obligations from grant spreadsheet. ? NOTE: For auditing purposes, if one was to reproduce the obligation amount it could change if you refer to the original document later than the date that we established the original obligation amount. Please always refer to the accrual spreadsheet for the obligation amount pulled at the time for the purpose of accruals. 4. Reduce obligation amount by 2% so that we don?t over accrue (The percentage was recommended?due to not spending everything that is obligated.). 5. First pivot to run is to identify total expenditures and accruals for SFY being processed. Use the expenditure amount for the second pivot table. 6. Second pivot to run is to figure out the split out the expenditure between ER and NB, because they are the most common. Calculate the left to accrue amount by taking the obligations with 2% reduction subtracting the expenditures as well as the previous accrual amount. To see what you need to accrue. 7. Third and Fourth pivot tables find the most common PI for each of the subobjects. 8. Fifth pivot table identifies most common org index. 9. Sixth pivot table (SABG)identifies the ER and NB expenditures by allocation, so that they can be accrued by percentage of the total expenditures. 10. Calculate percentages to spread the accrual across ER and/or NB in allocations, per grant. 11. Complete the rest of the workbook following our JV process with obtaining the JV log number, filling out the JV log, adding the explanation and backup data for the upload and release tab. On the JV tab complete the TC to be 736 and include GL 5111. If we need to complete a reversal the TC would be 736R. 12. Upload and email the JV to Supervisor and Lead. 13. Supervisor and Lead review, approve, and release the JV.
2022-067 The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the Block Grants for Prevention and Treatment of Substance Abuse program were allowable and met period of performance requirements. Assistance Listing Number and Title: 93.959 Block Grants for Prevention and Treatment of Substance Abuse 93.959 COVID-19 Block Grants for Prevention and Substance Abuse Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: 1B08TI083138-01; 6B08TI083138-01M003; 6B08TI083138-01M004; 6B08TI083486-01M001; 6B08TI083486-01M002; 6B08TI083486-01M004; 1B08TI83519-01; 1B08TI084681-01; 1B08TI083977-01 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Known Questioned Cost Amount: $19,959,714 Background The Health Care Authority, Division of Behavioral Health and Recovery, administers the Block Grants for Prevention and Treatment of Substance Abuse (SABG). The Authority subawards federal funds to counties, tribes, and nonprofit organizations to develop prevention programs and provide treatment and support services. In fiscal year 2022, the Authority spent about $67.3 million in federal program funds, $52 million of which it paid to subrecipients. The Authority can use grant funds only for costs that are allowable and incurred during the period of performance, as specified in the grant?s terms and conditions. At the beginning of each federal fiscal year, and whenever the Authority receives a new federal grant, it establishes new cost objectives and allocation codes to ensure expenditures are charged to the proper grants. When the Authority receives reimbursement requests, program managers are responsible for reviewing supporting documentation to determine if the services billed meet the period of performance requirements under the grant. Fiscal managers are also responsible for ensuring that payments are coded to the correct period. The Authority follows the accrual basis of accounting and uses the Agency Financial Reporting System (AFRS), which is the state?s central accounting system, to record federal expenditures. At the end of the fiscal year, the Authority?s federal financial reporting (FFR) unit estimates the amount of outstanding obligations to providers. These amounts are recorded in AFRS as an accrued expenditure for SABG and subsequently reported to OFM for the compilation of the Schedule of Expenditures of Federal Awards. FFR has written procedures for calculating its estimated accruals. The calculation begins by using a spreadsheet that tracks contractual obligations to SABG subrecipients and vendors to determine the total state obligation amount through the end of the subaward or contract, which usually extend past the end of the current state fiscal year. This total is then reduced by the number of actual payments made to the subrecipients and vendors, and is also reduced an additional 2 percent to account for anticipated underspending. The remaining total is then recorded as an estimated accrual for the fiscal year. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior two audits, we reported the Authority did not have adequate internal controls to ensure payments made under the SABG program met the period of performance requirements. The prior finding numbers were 2020-059 and 2021-057. Description of Condition The Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the SABG program were allowable and met period of performance requirements. Year-end Estimated Accruals During the audit period, the FFR unit recorded two state fiscal year-end estimated accruals totaling $19,870,537. The Authority did not retain the obligation workbook used at the time of calculating these estimated accruals. Without this documentation, we were unable to assess the accuracy of the obligated amount. However, the Authority confirmed that the obligation amount used in the calculation included expenditures that were incurred after the state fiscal year. Any expenditures incurred after the state fiscal year has ended are not allowed to be included in an accrual. Furthermore, provider payments liquidated after the state fiscal year are not assigned to the estimated accrual in the accounting system. Therefore, we could not determine if the estimated accrual amount was reasonable and accurately reflected expenditures that occurred within the state fiscal year. Transaction Testing We judgmentally selected and examined two expenditures that were recorded in the accounting system with service months prior to the allowed period of performance for the SABG federal fiscal year 2022 award. We found one of the expenditures (50 percent) was an accrual made at the end of the year with no subsequent liquidation payment. We also judgmentally selected and examined five out of a total population of 24 expenditures made during the SABG federal fiscal year 2020 award liquidation period. We found three expenditures (60 percent) were for indirect charges automatically applied to the award through the Authority?s cost allocation system for activities that occurred after the allowed period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition While the Authority had written procedures for the year-end estimated accrual, management did not ensure that only obligations incurred within the state fiscal year were included. Furthermore, the Authority did not have a process in place to review estimated year-end accruals to verify the reasonableness of the accrual calculation. Additionally, management did not ensure that the cost allocation system only allowed indirect payments occurring within an award?s period of performance to be charged to the grant, and did not monitor sufficiently to detect the improper charges. Effect of Condition and Questioned Costs Without retaining adequate support for the estimated year-end accruals and having a process to verify the reasonableness of the estimated calculation, the Authority cannot reasonably ensure its SABG expenditures are for allowable activities and within the period of performance. We identified $19,870,537 in known questioned costs related to the estimated year-end accruals. For the federal fiscal year 2022 award that opened during the audit period, we identified questioned costs totaling $85,492 for services performed outside the period of performance. For the federal fiscal year 2020 award that closed during the audit period, we identified questioned costs totaling $3,685 for indirect expenditures that were unallowable. In total, we identified $19,959,714 in known federal questioned costs. Without establishing adequate internal controls, the Authority cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Authority: ? Improve its internal controls to ensure estimated accruals are reasonable and supported ? Improve its internal controls to ensure the cost allocation system only charges eligible costs to the grant ? Improve its internal controls to ensure payments are within the award?s period of performance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Authority?s Response HCA concurs in part. HCA acknowledges that the version of the document used to determine year-end accruals was not retained as a supporting document. We also acknowledge that some portion of the accrued amount could have included obligations beyond state fiscal year 2022. HCA does not agree that we cannot reasonably ensure that SABG expenditures are for allowable activities and within the period of performance. Expenditures reported on SABG are prepared based on cash and liquidations and all costs are reviewed to ensure they meet the period of performance. While the year-end accruals may included some amounts beyond the state fiscal year, the amounts accrued were based on four quarters of activity. This would not result in errors in federal reporting or federal cash draws. To question the year-end accruals in their entirety is an overstatement of any potential error that was made. The year-end accruals were solely recorded as estimates, and were not used to make any program payments or draw funds from the grantor. HCA only makes program payments to subrecipients and contractors after receiving invoices which are reviewed by staff, including review that the expenditures are within the grant period of performance. HCA does not agree with repayment of the $19,870,537 questioned costs associated with year-end accruals. HCA also does not concur with repayment of the $85,492 questioned costs associated with an accrual transaction. An accrual was entered in the accounting system based on expected billing. No invoice for the transaction was received for FY 22 grant activity, and as noted in the finding no payment was made. HCA does not draw funds from the grantor until a payment is made, and as a result no funds were drawn for this accrual. HCA concurs with the $3,685 for indirect expenditures that were unallowable for the grant award. An accounting cost center was not correctly updated at the end of the grant period, and as a result some termination leave indirect expenditures were charged to the grant after the period of performance ended. HCA will review processes to ensure cost centers are appropriately closed to prevent unallowable expenditures from being charged to grant awards and discuss repayment with the grantor. HCA notes that of the total $19,959,714 questioned costs, only $3,685 meet the definition of Improper Payments as defined in Uniform Guidance 2 CFR 200.1. Based on preliminary discussions with the grantor, HCA should expect that repayment of questioned costs related to the accruals will not be requested as no funds were drawn. This information was shared with the auditor. Auditor?s Remarks In its response, the Authority acknowledged it did not retain supporting documentation to verify the year-end estimated accrual expenditures were incurred during the state fiscal year. Furthermore, the Authority acknowledged that the year-end estimated accruals likely included expenditures incurred after the state fiscal year. The Authority reports cash and accrued expenditures on the Schedule of Expenditures of Federal Awards and, as such, the accruals are required to be audited. In our judgment, the Authority does not have sufficient processes in place to verify the reasonableness of the year-end estimated accrual calculations. We reaffirm our finding and will follow up on the status of the Authority?s corrective action during our next audit period. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments, which states in part: (2) Where the costs, at the time of the audit, are not supported by adequate documentation. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200, Uniform Guidance, section 502, Basis for determining Federal awards expended, states in part: (a) Determining Federal awards expended. The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients, the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. Title 2 CFR Part 200, Uniform Guidance, section 510, Financial statements, states in part: (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Behavioral Health Grant Unit Procedures, state in part: WHAT IS ACCRUAL: Fiscal year end and end of biennium contract subsequent payments. PURPOSE: To prepare contract accruals for the end of a fiscal year or biennium and the subsequent payment of those invoices by the Behavioral Health Grant Unit. BACKGROUND: Accruals and liquidations are looked at a high-level by program, fund, and fund source (GF-S/GF-F), to see if the agency has over liquidated our authority. Some accruals are based on actual billings/claims, but a good chunk is based on estimates, because of the lag in billings, as well as the amount of contracts per grant; mainly block and SOR. BLOCK GRANT AND SOR PROCESS 1. Create a SFYXX Accrual workbook using a JV workbook template. 2. Pull grant direct expenditure data to date including GL 0159 (liquidations), cash expenditures (6510) and accruals (6505), using your grant Webi criteria. a. We pull in accruals (GL 6505), because we want to see accruals that have already been booked by AP, so we don?t double book them. b. Expenditures paid in the new SFY will automatically need to be accrued since they weren?t paid by the end of the SFY. c. Filter out/do not accrue on any interagency transactions including state universities. Those are processed outside of our unit. 3. Take total SFY of year processing obligations from grant spreadsheet. ? NOTE: For auditing purposes, if one was to reproduce the obligation amount it could change if you refer to the original document later than the date that we established the original obligation amount. Please always refer to the accrual spreadsheet for the obligation amount pulled at the time for the purpose of accruals. 4. Reduce obligation amount by 2% so that we don?t over accrue (The percentage was recommended?due to not spending everything that is obligated.). 5. First pivot to run is to identify total expenditures and accruals for SFY being processed. Use the expenditure amount for the second pivot table. 6. Second pivot to run is to figure out the split out the expenditure between ER and NB, because they are the most common. Calculate the left to accrue amount by taking the obligations with 2% reduction subtracting the expenditures as well as the previous accrual amount. To see what you need to accrue. 7. Third and Fourth pivot tables find the most common PI for each of the subobjects. 8. Fifth pivot table identifies most common org index. 9. Sixth pivot table (SABG)identifies the ER and NB expenditures by allocation, so that they can be accrued by percentage of the total expenditures. 10. Calculate percentages to spread the accrual across ER and/or NB in allocations, per grant. 11. Complete the rest of the workbook following our JV process with obtaining the JV log number, filling out the JV log, adding the explanation and backup data for the upload and release tab. On the JV tab complete the TC to be 736 and include GL 5111. If we need to complete a reversal the TC would be 736R. 12. Upload and email the JV to Supervisor and Lead. 13. Supervisor and Lead review, approve, and release the JV.
2022-067 The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the Block Grants for Prevention and Treatment of Substance Abuse program were allowable and met period of performance requirements. Assistance Listing Number and Title: 93.959 Block Grants for Prevention and Treatment of Substance Abuse 93.959 COVID-19 Block Grants for Prevention and Substance Abuse Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: 1B08TI083138-01; 6B08TI083138-01M003; 6B08TI083138-01M004; 6B08TI083486-01M001; 6B08TI083486-01M002; 6B08TI083486-01M004; 1B08TI83519-01; 1B08TI084681-01; 1B08TI083977-01 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Known Questioned Cost Amount: $19,959,714 Background The Health Care Authority, Division of Behavioral Health and Recovery, administers the Block Grants for Prevention and Treatment of Substance Abuse (SABG). The Authority subawards federal funds to counties, tribes, and nonprofit organizations to develop prevention programs and provide treatment and support services. In fiscal year 2022, the Authority spent about $67.3 million in federal program funds, $52 million of which it paid to subrecipients. The Authority can use grant funds only for costs that are allowable and incurred during the period of performance, as specified in the grant?s terms and conditions. At the beginning of each federal fiscal year, and whenever the Authority receives a new federal grant, it establishes new cost objectives and allocation codes to ensure expenditures are charged to the proper grants. When the Authority receives reimbursement requests, program managers are responsible for reviewing supporting documentation to determine if the services billed meet the period of performance requirements under the grant. Fiscal managers are also responsible for ensuring that payments are coded to the correct period. The Authority follows the accrual basis of accounting and uses the Agency Financial Reporting System (AFRS), which is the state?s central accounting system, to record federal expenditures. At the end of the fiscal year, the Authority?s federal financial reporting (FFR) unit estimates the amount of outstanding obligations to providers. These amounts are recorded in AFRS as an accrued expenditure for SABG and subsequently reported to OFM for the compilation of the Schedule of Expenditures of Federal Awards. FFR has written procedures for calculating its estimated accruals. The calculation begins by using a spreadsheet that tracks contractual obligations to SABG subrecipients and vendors to determine the total state obligation amount through the end of the subaward or contract, which usually extend past the end of the current state fiscal year. This total is then reduced by the number of actual payments made to the subrecipients and vendors, and is also reduced an additional 2 percent to account for anticipated underspending. The remaining total is then recorded as an estimated accrual for the fiscal year. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior two audits, we reported the Authority did not have adequate internal controls to ensure payments made under the SABG program met the period of performance requirements. The prior finding numbers were 2020-059 and 2021-057. Description of Condition The Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the SABG program were allowable and met period of performance requirements. Year-end Estimated Accruals During the audit period, the FFR unit recorded two state fiscal year-end estimated accruals totaling $19,870,537. The Authority did not retain the obligation workbook used at the time of calculating these estimated accruals. Without this documentation, we were unable to assess the accuracy of the obligated amount. However, the Authority confirmed that the obligation amount used in the calculation included expenditures that were incurred after the state fiscal year. Any expenditures incurred after the state fiscal year has ended are not allowed to be included in an accrual. Furthermore, provider payments liquidated after the state fiscal year are not assigned to the estimated accrual in the accounting system. Therefore, we could not determine if the estimated accrual amount was reasonable and accurately reflected expenditures that occurred within the state fiscal year. Transaction Testing We judgmentally selected and examined two expenditures that were recorded in the accounting system with service months prior to the allowed period of performance for the SABG federal fiscal year 2022 award. We found one of the expenditures (50 percent) was an accrual made at the end of the year with no subsequent liquidation payment. We also judgmentally selected and examined five out of a total population of 24 expenditures made during the SABG federal fiscal year 2020 award liquidation period. We found three expenditures (60 percent) were for indirect charges automatically applied to the award through the Authority?s cost allocation system for activities that occurred after the allowed period of performance. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition While the Authority had written procedures for the year-end estimated accrual, management did not ensure that only obligations incurred within the state fiscal year were included. Furthermore, the Authority did not have a process in place to review estimated year-end accruals to verify the reasonableness of the accrual calculation. Additionally, management did not ensure that the cost allocation system only allowed indirect payments occurring within an award?s period of performance to be charged to the grant, and did not monitor sufficiently to detect the improper charges. Effect of Condition and Questioned Costs Without retaining adequate support for the estimated year-end accruals and having a process to verify the reasonableness of the estimated calculation, the Authority cannot reasonably ensure its SABG expenditures are for allowable activities and within the period of performance. We identified $19,870,537 in known questioned costs related to the estimated year-end accruals. For the federal fiscal year 2022 award that opened during the audit period, we identified questioned costs totaling $85,492 for services performed outside the period of performance. For the federal fiscal year 2020 award that closed during the audit period, we identified questioned costs totaling $3,685 for indirect expenditures that were unallowable. In total, we identified $19,959,714 in known federal questioned costs. Without establishing adequate internal controls, the Authority cannot reasonably ensure it is using federal funds for allowable purposes and that spending occurs within the allowed period of performance. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Authority: ? Improve its internal controls to ensure estimated accruals are reasonable and supported ? Improve its internal controls to ensure the cost allocation system only charges eligible costs to the grant ? Improve its internal controls to ensure payments are within the award?s period of performance ? Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Authority?s Response HCA concurs in part. HCA acknowledges that the version of the document used to determine year-end accruals was not retained as a supporting document. We also acknowledge that some portion of the accrued amount could have included obligations beyond state fiscal year 2022. HCA does not agree that we cannot reasonably ensure that SABG expenditures are for allowable activities and within the period of performance. Expenditures reported on SABG are prepared based on cash and liquidations and all costs are reviewed to ensure they meet the period of performance. While the year-end accruals may included some amounts beyond the state fiscal year, the amounts accrued were based on four quarters of activity. This would not result in errors in federal reporting or federal cash draws. To question the year-end accruals in their entirety is an overstatement of any potential error that was made. The year-end accruals were solely recorded as estimates, and were not used to make any program payments or draw funds from the grantor. HCA only makes program payments to subrecipients and contractors after receiving invoices which are reviewed by staff, including review that the expenditures are within the grant period of performance. HCA does not agree with repayment of the $19,870,537 questioned costs associated with year-end accruals. HCA also does not concur with repayment of the $85,492 questioned costs associated with an accrual transaction. An accrual was entered in the accounting system based on expected billing. No invoice for the transaction was received for FY 22 grant activity, and as noted in the finding no payment was made. HCA does not draw funds from the grantor until a payment is made, and as a result no funds were drawn for this accrual. HCA concurs with the $3,685 for indirect expenditures that were unallowable for the grant award. An accounting cost center was not correctly updated at the end of the grant period, and as a result some termination leave indirect expenditures were charged to the grant after the period of performance ended. HCA will review processes to ensure cost centers are appropriately closed to prevent unallowable expenditures from being charged to grant awards and discuss repayment with the grantor. HCA notes that of the total $19,959,714 questioned costs, only $3,685 meet the definition of Improper Payments as defined in Uniform Guidance 2 CFR 200.1. Based on preliminary discussions with the grantor, HCA should expect that repayment of questioned costs related to the accruals will not be requested as no funds were drawn. This information was shared with the auditor. Auditor?s Remarks In its response, the Authority acknowledged it did not retain supporting documentation to verify the year-end estimated accrual expenditures were incurred during the state fiscal year. Furthermore, the Authority acknowledged that the year-end estimated accruals likely included expenditures incurred after the state fiscal year. The Authority reports cash and accrued expenditures on the Schedule of Expenditures of Federal Awards and, as such, the accruals are required to be audited. In our judgment, the Authority does not have sufficient processes in place to verify the reasonableness of the year-end estimated accrual calculations. We reaffirm our finding and will follow up on the status of the Authority?s corrective action during our next audit period. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200.1, Uniform Guidance, establishes definitions for improper payments, which states in part: (2) Where the costs, at the time of the audit, are not supported by adequate documentation. Part 200.410 establishes requirements for the collection of unallowable costs. Title 2 CFR Part 200, Uniform Guidance, section 502, Basis for determining Federal awards expended, states in part: (a) Determining Federal awards expended. The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients, the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. Title 2 CFR Part 200, Uniform Guidance, section 510, Financial statements, states in part: (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Behavioral Health Grant Unit Procedures, state in part: WHAT IS ACCRUAL: Fiscal year end and end of biennium contract subsequent payments. PURPOSE: To prepare contract accruals for the end of a fiscal year or biennium and the subsequent payment of those invoices by the Behavioral Health Grant Unit. BACKGROUND: Accruals and liquidations are looked at a high-level by program, fund, and fund source (GF-S/GF-F), to see if the agency has over liquidated our authority. Some accruals are based on actual billings/claims, but a good chunk is based on estimates, because of the lag in billings, as well as the amount of contracts per grant; mainly block and SOR. BLOCK GRANT AND SOR PROCESS 1. Create a SFYXX Accrual workbook using a JV workbook template. 2. Pull grant direct expenditure data to date including GL 0159 (liquidations), cash expenditures (6510) and accruals (6505), using your grant Webi criteria. a. We pull in accruals (GL 6505), because we want to see accruals that have already been booked by AP, so we don?t double book them. b. Expenditures paid in the new SFY will automatically need to be accrued since they weren?t paid by the end of the SFY. c. Filter out/do not accrue on any interagency transactions including state universities. Those are processed outside of our unit. 3. Take total SFY of year processing obligations from grant spreadsheet. ? NOTE: For auditing purposes, if one was to reproduce the obligation amount it could change if you refer to the original document later than the date that we established the original obligation amount. Please always refer to the accrual spreadsheet for the obligation amount pulled at the time for the purpose of accruals. 4. Reduce obligation amount by 2% so that we don?t over accrue (The percentage was recommended?due to not spending everything that is obligated.). 5. First pivot to run is to identify total expenditures and accruals for SFY being processed. Use the expenditure amount for the second pivot table. 6. Second pivot to run is to figure out the split out the expenditure between ER and NB, because they are the most common. Calculate the left to accrue amount by taking the obligations with 2% reduction subtracting the expenditures as well as the previous accrual amount. To see what you need to accrue. 7. Third and Fourth pivot tables find the most common PI for each of the subobjects. 8. Fifth pivot table identifies most common org index. 9. Sixth pivot table (SABG)identifies the ER and NB expenditures by allocation, so that they can be accrued by percentage of the total expenditures. 10. Calculate percentages to spread the accrual across ER and/or NB in allocations, per grant. 11. Complete the rest of the workbook following our JV process with obtaining the JV log number, filling out the JV log, adding the explanation and backup data for the upload and release tab. On the JV tab complete the TC to be 736 and include GL 5111. If we need to complete a reversal the TC would be 736R. 12. Upload and email the JV to Supervisor and Lead. 13. Supervisor and Lead review, approve, and release the JV.
MISSISSIPPI VETERANS AFFAIRS REPORTING Material Weakness Material Noncompliance 2022-033 Strengthen Controls Over the Preparation, Recording, and Review of the Schedule of Expenditures of Federal Awards. ALN Number 64.015 Veterans State Nursing Home Care Federal Award No. N/A Pass-through Entity N/A Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr ?200.510(b)) states, in part ?the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ?200.502.? Code of Federal Regulations (2 cfr ?200.502(a)) states, in part, ?the determination of when a federal award is expended must be based on when the activity related to the Federal award occurs.? The Internal Control ? Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the U.S. Government Accountability Office Standards for Internal Control in the Federal Government (Green Book) specify that a satisfactory control environment is only effective when there are adequate control activities in place. Effective control activities dictate that a review is performed to verify the accuracy and completeness of financial information reported. The Federal Grant Activity Schedule captures amounts that must be accurate and complete in order to ensure the accuracy of financial and federal information reported on such schedule to verify the accuracy and completeness of financial information reported. The Mississippi Agency Accounting Policies and Procedures (MAAPP) manual Section 27.30.60 states, ?The Federal Grant Activity schedule supports amounts reported on the GAAP packet for federal grant revenues, receivables, deferred revenues and expenditures. The schedule is also used for preparing the Single Audit Report required by the Single Audit Act, Office of Management and Budget Uniform Grant Guidance and the State?s audit requirements. The amounts on this schedule should be reconciled by the agency with amounts reported on federal financial reports.? Condition The Department failed to report all federal program expenditures on its Schedule of Expenditures of Federal Awards (SEFA). During the audit for the statewide ACFR, the auditors noted that the SEFA from the Department was incomplete and did not contain the federal expenditures for ALN #64.015. Cause Management at MSVA is relatively new and did not realize the federal monies received required the agency to prepare a SEFA. Effect The Department is not compliant with the federal and State report requirements for federal expenditures. Inaccurate reporting of federal program expenditures may result in unreliable and inaccurate reporting to the state and federal oversight organizations, as well materially affect the State?s risk assessment over major federal programs. Recommendation We recommend that the Department review and enhance procedures over accounting for and reporting federal program expenditure activity. The Departments enhancement to the procedures should strengthen internal controls over the preparation and review of the SEFA to ensure that all grant award information and related expenditures are complete and accurate. Repeat Finding Yes; 2021-051, 2020-040. Statistically Valid N/A
2022-001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles / Types of Services Allowed or Disallowed, Cash Management, and Reporting U.S. Department of Health and Human Services: Passed through State of New Jersey, Department of Health: COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (SARS-COV-2 Hospital Testing) Federal Grant Number and Years: PHLP21CHT017 (7/1/2021 ? 6/30/2022) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria: Activities Allowed or Unallowed and Allowable Costs/Cost Principles / Types of Services Allowed or Disallowed - Except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards (2 CFR Section 200.404). Cash Management - Except where otherwise authorized by statute, when non-federal entities are funded under the reimbursement method, costs must be adequately documented as paid prior to the date of the reimbursement request (2 CFR section 200.305(b)(3)) Reporting - In accordance with the grant agreement and the reporting requirements for State of New Jersey Department of Health (NJDOH), direct grants and pass-through funds are fulfilled utilizing a Report of Expenditures (ROE). ROEs are prepared and submitted quarterly in order to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for reimbursement and tracking purposes. The ROEs are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee?s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Additionally, in accordance with Federal requirements, a non-Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context: On a quarterly basis, University Hospital (the Hospital) prepares and reports to New Jersey Department of Health the program expenditures for Federal funding amounts on the ROE, which are then used to prepare the annual SEFA at the end of the fiscal year. The Hospital?s expenditures per the ROE were greater than the expenditures that were supported by the general ledger and accounting records, therefore, the Hospital submitted the ROE and claim towards the grant for reimbursement above the amount allowed by $405,971, due to a double counting of previously reimbursed costs. Further, the Hospital?s indirect costs charged were greater than the allowable amount by $3,514. The original amount reported on the SEFA by the Hospital and charged to the State was $3,142,428. The Hospital has adjusted the SEFA to account for allowable costs, which is $2,732,943. The Hospital?s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the Hospital has adequate supporting accounting records for allowable costs claimed and reported on the ROE and SEFA. Cause: Management's review of the ROE did not identify the double counting of previously reimbursed costs, therefore, the review was not performed at the appropriate level of precision in accordance with its design. Effect: The Hospital overcharged the grant by $409,485. Questioned Costs: $409,485 Recommendation: We recommend that the Hospital strengthen its procedures to ensure that the quarterly ROEs include the correct amount of allowable expenditures based upon the general ledger and accounting records and reflected on the SEFA and that the review of the ROE is properly performed prior to submission for reimbursement.
REPORTING OF PROGRAM EXPENDITURES The Department was unable to provide documentation supporting the amounts reported in the Highway Safety Plan Cost Summary and Federal Reimbursement Voucher reports. The Department?s current program accounting also results in program expenditures being duplicated in the State?s accounting system and Schedule of Expenditures of Federal Awards (SEFA). Criteria: HS Form 217 ? 23 CFR section 1200.11(e) states ?HS Form 217, meeting the requirements of Appendix B, be completed to reflect the State's proposed allocations of funds (including carry-forward funds) by program area. The funding level used shall be an estimate of available funding for the upcoming fiscal year based on amounts authorized for the fiscal year and projected carry-forward funds. Additionally, for each program area, an accompanying list of projects that the State proposes to conduct for that fiscal year and an estimated amount of Federal funds for each such project.? Federal Reimbursement Voucher ? 23 CFR 1200.33 states ?Each State shall submit official vouchers for expenses incurred to the Approving Official. At a minimum, each voucher shall provide the following information for expenses claimed in each program area: (1) Program Area for which expenses were incurred and an itemization of project numbers and amount of Federal funds expended for each project for which reimbursement is being sought; (2) Federal funds obligated; (3) Amount of Federal funds allocated to local benefit (provided no less than mid-year (by March 31) and with the final voucher); (4) Cumulative Total Cost to Date; (5) Cumulative Federal Funds Expended; (6) Previous Amount Claimed; (7) Amount Claimed this Period; (8) Matching rate (or special matching writeoff used, i.e., sliding scale rate authorized under 23 U.S.C. 120).? 2 CFR 200.510(b) Schedule of expenditures of Federal awards. ?The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502.? Condition: HS Form 217 ? RIDOT was unable to provide documentation supporting information included in the Highway Safety Plan Cost Summary report for 18 of the 25 projects tested, as follows (it should be noted that 3 projects are included in more than one error category): ? 8 projects included on the report were not included in the Highway Safety Plan; ? 6 projects? budget amounts included in the Highway Safety Plan Cost Summary report did not agree to supporting documentation; ? 7 projects State and/or Local share amounts did not agree to supporting documentation. Federal Reimbursement Voucher ? RIDOT was unable to provide documentation supporting amounts reported for; a.) HCS (Highway Cost Summary) Federal Funds Obligated, b.) Share to Local Benefit, and c.) State/Federal Cost to Date on the Federal Reimbursement Voucher for all 25 projects tested. Highway safety grants are expended by multiple departments within the State, namely the Attorney General?s Office, Department of Public Safety, Department of Health and RIDOT. Those departments record expenditures to federal accounts linked to HSC within the State?s accounting system (RIFANS) and then provide backup documentation to RIDOT for reimbursement. RIDOT then records those same expenditures within its Financial Management System (FMS) and RIFANS, as subrecipient payments, causing the expenditures to be duplicated in the State?s accounting system and Schedule of Expenditures of Federal Awards (SEFA) in an amount approximating $581,665. HSC expenditures were not duplicated on federal reports because RIDOT uses its FMS to report and claim HSC expenditures. Cause: RIDOT?s policies and procedures are not adequate to ensure the accurate completion of the Highway Safety Plan Cost Summary report. RIDOT?s use of multiple accounting systems to meet operational and financial reporting objectives results in unnecessary complexity and control weaknesses. Effect: Information provided to the National Highway Traffic Safety Administration may not be accurate. Inaccurate reporting of program expenditures in the State?s SEFA. Questioned Costs: None Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2022-049a Enhance reporting policies and procedures over the completion and submission of the Highway Safety Plan Cost Summary (HS Form 217). Verify the amounts submitted are accurate and if necessary, resubmit with accurate and supported amounts. 2022-049b Enhance reporting policies and procedures over the completion and submission of the Federal Reimbursement Voucher report. 2022-049c Enhance controls and address current deficiencies in accounting procedures to ensure program expenditure within the State?s reporting entity are reported accurately on the SEFA.
REPORTING OF PROGRAM EXPENDITURES The Department was unable to provide documentation supporting the amounts reported in the Highway Safety Plan Cost Summary and Federal Reimbursement Voucher reports. The Department?s current program accounting also results in program expenditures being duplicated in the State?s accounting system and Schedule of Expenditures of Federal Awards (SEFA). Criteria: HS Form 217 ? 23 CFR section 1200.11(e) states ?HS Form 217, meeting the requirements of Appendix B, be completed to reflect the State's proposed allocations of funds (including carry-forward funds) by program area. The funding level used shall be an estimate of available funding for the upcoming fiscal year based on amounts authorized for the fiscal year and projected carry-forward funds. Additionally, for each program area, an accompanying list of projects that the State proposes to conduct for that fiscal year and an estimated amount of Federal funds for each such project.? Federal Reimbursement Voucher ? 23 CFR 1200.33 states ?Each State shall submit official vouchers for expenses incurred to the Approving Official. At a minimum, each voucher shall provide the following information for expenses claimed in each program area: (1) Program Area for which expenses were incurred and an itemization of project numbers and amount of Federal funds expended for each project for which reimbursement is being sought; (2) Federal funds obligated; (3) Amount of Federal funds allocated to local benefit (provided no less than mid-year (by March 31) and with the final voucher); (4) Cumulative Total Cost to Date; (5) Cumulative Federal Funds Expended; (6) Previous Amount Claimed; (7) Amount Claimed this Period; (8) Matching rate (or special matching writeoff used, i.e., sliding scale rate authorized under 23 U.S.C. 120).? 2 CFR 200.510(b) Schedule of expenditures of Federal awards. ?The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502.? Condition: HS Form 217 ? RIDOT was unable to provide documentation supporting information included in the Highway Safety Plan Cost Summary report for 18 of the 25 projects tested, as follows (it should be noted that 3 projects are included in more than one error category): ? 8 projects included on the report were not included in the Highway Safety Plan; ? 6 projects? budget amounts included in the Highway Safety Plan Cost Summary report did not agree to supporting documentation; ? 7 projects State and/or Local share amounts did not agree to supporting documentation. Federal Reimbursement Voucher ? RIDOT was unable to provide documentation supporting amounts reported for; a.) HCS (Highway Cost Summary) Federal Funds Obligated, b.) Share to Local Benefit, and c.) State/Federal Cost to Date on the Federal Reimbursement Voucher for all 25 projects tested. Highway safety grants are expended by multiple departments within the State, namely the Attorney General?s Office, Department of Public Safety, Department of Health and RIDOT. Those departments record expenditures to federal accounts linked to HSC within the State?s accounting system (RIFANS) and then provide backup documentation to RIDOT for reimbursement. RIDOT then records those same expenditures within its Financial Management System (FMS) and RIFANS, as subrecipient payments, causing the expenditures to be duplicated in the State?s accounting system and Schedule of Expenditures of Federal Awards (SEFA) in an amount approximating $581,665. HSC expenditures were not duplicated on federal reports because RIDOT uses its FMS to report and claim HSC expenditures. Cause: RIDOT?s policies and procedures are not adequate to ensure the accurate completion of the Highway Safety Plan Cost Summary report. RIDOT?s use of multiple accounting systems to meet operational and financial reporting objectives results in unnecessary complexity and control weaknesses. Effect: Information provided to the National Highway Traffic Safety Administration may not be accurate. Inaccurate reporting of program expenditures in the State?s SEFA. Questioned Costs: None Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2022-049a Enhance reporting policies and procedures over the completion and submission of the Highway Safety Plan Cost Summary (HS Form 217). Verify the amounts submitted are accurate and if necessary, resubmit with accurate and supported amounts. 2022-049b Enhance reporting policies and procedures over the completion and submission of the Federal Reimbursement Voucher report. 2022-049c Enhance controls and address current deficiencies in accounting procedures to ensure program expenditure within the State?s reporting entity are reported accurately on the SEFA.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.
Finding 2022-006 Programs: All Material Weakness over Schedule of Expenditures of Federal Awards (SEFA) Reporting Repeat Finding: Yes Condition: During our fiscal year 2022 audit, we observed that the detail expenditure information in the accounting software differed from the expenditures reported by various City departments. We were not able to determine if the Federal expenditures and subrecipient payments for all grants from the City was complete. Additionally, there were unreconciled amounts passed through to subrecipients. Finance is responsible for preparing the schedule of expenditures of Federal awards based upon grant information obtained from the financial accounting records and other information provided by each department or agency. Per discussion with Finance, we became aware that grant information and documents are not maintained by Finance. Grant documents are necessary for Finance to obtain required information for the Schedule, such as AL titles and numbers, pass through identification information and subrecipient information. Criteria: In accordance with 2 CFR 200.303, Internal controls: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.508, Auditee responsibilities: The auditee must: (b) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with ?200.510 Financial statements. In accordance with 2 CFR 200.510, Financial statements: (b) Schedule of expenditures of Federal awards: the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. For a cluster of programs, also provide the total for the cluster. Finding 2022-006 (continued) Criteria: (continued) (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule; and (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the non-Federal entity elected to use the 10% de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. Cause: The City does not maintain a centralized grant accounting function or standardized policies and procedures, including requirements to periodically submit and reconcile expenditures; instead, each department maintains its own grant information. The lack of submission of grant documents and accurate information by the various agencies and departments to Finance weakens internal controls over grant reporting and hinders the ability of Finance to accurately prepare the Schedule. Controls have not been established by the City to ensure complete and accurate reporting for the Schedule for the 2022 fiscal year. Effect: The determination of which major Federal programs will be audited are affected by the accuracy of the Schedule at the time of audit. Without proper internal controls over financial reporting, inaccurate reporting of the City?s financial information could occur. As a result, individual program reports throughout the year could have inaccurate information. Questioned Costs: Unknown. Recommendation: We recommend that Finance establish policies and procedures to ensure that the Federal funds are properly identified and reported accurately in the Schedule in accordance with Uniform Guidance requirements. We also recommend that individuals responsible for administering Federal assistance programs with the City receive training in grant administration. Internal controls over financial reporting should be designed to prevent, detect or correct errors in a timely manner. Without adequate controls, the City cannot provide reasonable assurance that the Schedule is fairly presented. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor?s Conclusion: Finding remains as stated.