Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a 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 the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a 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 the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a 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 the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
2022‐001—FINANCIAL TRACKING OF FEDERAL GRANTS AND PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Federal Agency: All presented in the Schedule of Expenditures of Federal Awards (SEFA). Federal Program Name: All presented in the SEFA. Assistance Listing Number: All presented in SEFA. Federal Award Identification Number and Year: All presented in SEFA. Award Period: N/A Questioned Costs: None Type of Finding • (E) Significant Deficiency in Internal Control Over Compliance of Federal Awards • (F) Instance of Noncompliance related to Federal Awards Statement of Condition During our audit, we were unable to determine if the Schedule of Expenditures of Federal Awards (SEFA) was accurate. While we believe the selection of the NMH200032-2020 and NMH2001W068-2020 grants were accurate as major federal programs per our determination calculation, we did not receive sufficient audit evidence on the accuracy of the expenditures presented in the SEFA. Therefore, we were unable to perform sufficient auditing procedures such as comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements, This has led us to disclaim our opinion related to whether the SEFA is fairly stated, in all material respects, in relation to the financial statements as a whole for the year ended December 31, 2022. Criteria 2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of Federal awards (SEFA) 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. Per 2 CFR 200.502 the determination of when a Federal award is expended should 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. In addition, 2 CFR Part 200.303 requires the program establish and maintain effective internal controls over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Effect Without an established process governed by effective internal controls, the Housing Trust may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, the errors could result in improper selections of major federal program(s) for the single audit and a substandard single audit. This could affect the auditee’s eligibility for future federal awards or result in audit findings by the federal awarding agencies or pass-through entities. Cause the Housing Trust did not have adequate policies and procedures to ensure that the information reported in its SEFA was accurate and complete. Also, the Housing Trust did not have a system to reconcile its SEFA with its general ledger and other supporting documents. Recommendation We recommend the Housing Trust improve the financial tracking of its grants, corresponding expenses and other activity related to those federal grants to ensure the information reported in its SEFA is accurate and complete. We also recommend that the auditee establish a system to reconcile its SEFA with its general ledger and other supporting documents, including the name of grantor, the assistance listing #, the pass-through number, if applicable, and review its SEFA for any errors or omissions before submission. View of Responsible Officials and Corrective Action Plan Response. Agreed. Where feasible, the Housing Trust will aim to improve management of all federal grants. A process of documentation verification prior to any requests made for financial draws will include employee, supervisor, business operations manager, and executive director level approvals to ensure compliance and availability of funds. A monthly federal request for reimbursements with all grantee information will be used and reconciled monthly with QuickBooks. This report will mirror the SEFA form so auditors will receive the information in a timely manner. For any quarterly reports, the three months of reporting will again be reconciled prior to submission. All new processes and compliance will be updated in the policies and procedure manual. As the Executive Director prepares the 2024 budget, a reorganization of the business operations department will be sought. A new position to prepare and work on all federal grant tasks will be hired and report to the Business Operations Manager. In the meantime, the Business Operations Manager has started to develop checks and balances. Corrective Action Plan Timeline: Immediately Designation Of Employee Position Responsible For Meeting Deadline: Business Operations Manager
2022‐001—FINANCIAL TRACKING OF FEDERAL GRANTS AND PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Federal Agency: All presented in the Schedule of Expenditures of Federal Awards (SEFA). Federal Program Name: All presented in the SEFA. Assistance Listing Number: All presented in SEFA. Federal Award Identification Number and Year: All presented in SEFA. Award Period: N/A Questioned Costs: None Type of Finding • (E) Significant Deficiency in Internal Control Over Compliance of Federal Awards • (F) Instance of Noncompliance related to Federal Awards Statement of Condition During our audit, we were unable to determine if the Schedule of Expenditures of Federal Awards (SEFA) was accurate. While we believe the selection of the NMH200032-2020 and NMH2001W068-2020 grants were accurate as major federal programs per our determination calculation, we did not receive sufficient audit evidence on the accuracy of the expenditures presented in the SEFA. Therefore, we were unable to perform sufficient auditing procedures such as comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements, This has led us to disclaim our opinion related to whether the SEFA is fairly stated, in all material respects, in relation to the financial statements as a whole for the year ended December 31, 2022. Criteria 2 CFR 200.510 indicates that the auditee must prepare a schedule of expenditures of Federal awards (SEFA) 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. Per 2 CFR 200.502 the determination of when a Federal award is expended should 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. In addition, 2 CFR Part 200.303 requires the program establish and maintain effective internal controls over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Effect Without an established process governed by effective internal controls, the Housing Trust may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, the errors could result in improper selections of major federal program(s) for the single audit and a substandard single audit. This could affect the auditee’s eligibility for future federal awards or result in audit findings by the federal awarding agencies or pass-through entities. Cause the Housing Trust did not have adequate policies and procedures to ensure that the information reported in its SEFA was accurate and complete. Also, the Housing Trust did not have a system to reconcile its SEFA with its general ledger and other supporting documents. Recommendation We recommend the Housing Trust improve the financial tracking of its grants, corresponding expenses and other activity related to those federal grants to ensure the information reported in its SEFA is accurate and complete. We also recommend that the auditee establish a system to reconcile its SEFA with its general ledger and other supporting documents, including the name of grantor, the assistance listing #, the pass-through number, if applicable, and review its SEFA for any errors or omissions before submission. View of Responsible Officials and Corrective Action Plan Response. Agreed. Where feasible, the Housing Trust will aim to improve management of all federal grants. A process of documentation verification prior to any requests made for financial draws will include employee, supervisor, business operations manager, and executive director level approvals to ensure compliance and availability of funds. A monthly federal request for reimbursements with all grantee information will be used and reconciled monthly with QuickBooks. This report will mirror the SEFA form so auditors will receive the information in a timely manner. For any quarterly reports, the three months of reporting will again be reconciled prior to submission. All new processes and compliance will be updated in the policies and procedure manual. As the Executive Director prepares the 2024 budget, a reorganization of the business operations department will be sought. A new position to prepare and work on all federal grant tasks will be hired and report to the Business Operations Manager. In the meantime, the Business Operations Manager has started to develop checks and balances. Corrective Action Plan Timeline: Immediately Designation Of Employee Position Responsible For Meeting Deadline: Business Operations Manager
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “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 2 CFR 200.502, Basis for determining Federal awards expended. Condition: Due to the nature of Rainbow Health Minnesota’s federal funding, management has been unable to accurately identify total federal expenditures for reporting on the SEFA. Cause: Internal controls are not in place to identify all contract and grant agreements that are federally funded. Additionally, Rainbow Health Minnesota does not always receive notification from its pass-through funders that specifies the federally funded portion of each payment received. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not reflect all the federal awards subject to the Uniform Guidance. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Rainbow Health Minnesota review procedures to ensure timely identification of federal funds, including increasing communication with pass-through funders to identify all expenditures that are federal in nature. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and identifies federal funding based on contract language. The contracts do not include a percentage of funding that is not federal. To ensure proper spending of federal funds, Rainbow Health Minnesota treats all funds as federal funds.
2 C.F.R. Subpart F 200.510(b) requires that the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the County'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. 2 CFR Part 170 "subaward" has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. The County's Federal Schedule had the following error: Funds provided to subrecipients for the Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) were understated by $3,000,000. Errors and omissions to the Schedule of Expenditures of Federal Awards could adversely affect future grant awards in addition to causing an inaccurate assessment of major federal programs that would be subjected to audit. Adjustments, to which management have agreed, are reflected in the accompanying Schedule. County management should review all grant and loan awards and be familiar with federal reporting requirements. The County 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 may help ensure the Schedule is complete and accurate and major federal programs are correctly identified for audit.
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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 Found, Including Perspective: The Schedule of Expenditures of Federal Awards (SEFA) prepared by management contained differences between federal expenditures reported and the amounts supported by the underlying books and records. In addition, there is no evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA to ensure that amounts are properly presented. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to identify errors in the SEFA and to maintain evidence of management’s detail review of the reconciliation between the underlying expenditure detail to the SEFA. Questioned Costs: None
Program Information: Temporary Assistance for Needy Families (ALN #93.558) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): L. Reporting- The auditee must prepare a schedule of expenditures of Federal awards (the ?SEFA?) 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 Basis for determining Federal awards expended. 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 Research and Development (?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 passthrough 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 Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 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. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414. Condition: The SEFA, as prepared by management, did not originally include all expenditures for one federal grant. Cause: Administrative oversight with respect to preparation of the SEFA. Effect or Potential Effect: The original draft SEFA was incomplete. Questioned Costs: None. Context: The original draft SEFA was incomplete. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to preparation and review of the SEFA. Views of Responsible Officials and Planned Corrective Actions: Grant agreements will be reviewed to confirm if expenditures from pass-through entities are related to federal or state grants, and appropriately include applicable federal grants in the SEFA.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
Finding 2022-001 Identification of the Federal Program: Federal Agency: U.S. Department of Health and Human Services, United States Department of Defense Assistance Listing: Various ? Research & Development (R&D) Cluster Pass-Through Grantor: Various Pass-Through Award Number: Various Pass-Through Award Period: Various Federal Agency: Department of Homeland Security Assistance Listing: 97.036 ? COVID-19 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (FEMA) Pass-Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass-Through Award Number: 4494-DR-MI Pass-Through Award Period: 1/20/2020-7/1/2022 Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Pass-Through Award Period: 1/1/2020-12/31/2022 (Periods 3 and 4) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR Section 200.303 of the Uniform Guidance States the Following Regarding Internal Control: ?The Non-Federal Entity Must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR 200.510 requires that 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 in accordance with Section 200.502.? 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 and the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Schedule of Expenditures of Federal Awards (the Schedule) prepared by the Corewell Health and Subsidiaries (the System) did not appropriately reflect the federal expenses incurred. The final Schedule was corrected for the differences identified. Cause: Management did not design internal controls to ensure appropriate accumulation of the data necessary to complete the Schedule. Effect or Potential Effect: Federal expenditures were inappropriately included or excluded from the Schedule. Questioned Costs: None Context: Total federal expenses included on the Schedule were $102,235,937 for the year ended December 31, 2022. Total expenses included on the final Schedule were $101,562,371 for the year ended December 31, 2022. The federal expenditures were misstated as follows: See Schedule of Findings and Questioned Costs. Identification as a Repeat Finding: Partial Repeat Finding of Corewell Health East 2021-001. Recommendation: Management should assess its internal controls over the identification of federal expenditures to ensure the Schedule is complete. Views of Responsible Officials: The enhanced Schedule process and controls implemented by Corewell Health East in 2023 will be reviewed. The misstated amounts of the R&D Cluster occurred as a result of the timing of posted expenses during the first month of the merger of Spectrum Health and Beaumont Health in February 2022. This was a one-time occurrence and we do not anticipate that this will be an issue in future years. In addition, the successful implementation and transition to Workday, a new Corporate financial management system, has improved award setup functionality that enables improved differentiation of awards, identifying which need to be included on the annual Schedule of Expenditures of Federal Awards and those that should be excluded. The understatement related to FEMA was a one-time occurrence related to the clarification of guidelines on the inclusion of a new Category Z FEMA obligation in 2022 on the SEFA. This has been corrected in 2023. The overstatement related to PRF was due to an improper inclusion of Corewell Health East funding on the Schedule and an adjustment related to the submitted amount of Corewell Health West funding on the Schedule. On the 2023 SEFA we will implement a management review and sign-off of the inputs prior to submission.
2022-002 Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of State Assistance Listing Number: 19.706 Assistance Listing Name: Partnership for Regional East Africa Counterterrorism Award Numbers: Direct Award Numbers Award Period SLMAQM20CA2264 September 28, 2020 through March 29, 2024 SLMAQM20GR2364 September 28, 2020 through September 30, 2024 Criteria: CFR Section ?200.510(b) states in part: ?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 CFR Section ?200.502 Basis for determining Federal awards expended.? The schedule must provide total Federal awards expended for each individual Federal program. In accordance with ?200.302 Financial Management, a 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 the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management?s preparation of the SEFA, BDO identified two awards whose assistance listing number was changed by the federal entity in award amendments issued prior to December 31, 2022. Management failed to update the assistance listing number for the awards within the SEFA to address the award modifications. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. The Organization did not adequately review award modifications for changes to existing awards. Effect: The SEFA initially provided to BDO resulted in incorrect major program selection as prescribed under the Unform Guidance. During the review of the award agreements, BDO identified the assistance listing numbers for the two awards had been modified. This issue resulted in a different major program selection once the SEFA was updated to reflect the correct assistance listing numbers. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend management to continue to focus on training for both preparer and reviewers of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section ?200.510(b). This will ensure that the SEFA provides all relevant information as proscribed.
2022-002 Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of State Assistance Listing Number: 19.706 Assistance Listing Name: Partnership for Regional East Africa Counterterrorism Award Numbers: Direct Award Numbers Award Period SLMAQM20CA2264 September 28, 2020 through March 29, 2024 SLMAQM20GR2364 September 28, 2020 through September 30, 2024 Criteria: CFR Section ?200.510(b) states in part: ?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 CFR Section ?200.502 Basis for determining Federal awards expended.? The schedule must provide total Federal awards expended for each individual Federal program. In accordance with ?200.302 Financial Management, a 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 the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management?s preparation of the SEFA, BDO identified two awards whose assistance listing number was changed by the federal entity in award amendments issued prior to December 31, 2022. Management failed to update the assistance listing number for the awards within the SEFA to address the award modifications. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. The Organization did not adequately review award modifications for changes to existing awards. Effect: The SEFA initially provided to BDO resulted in incorrect major program selection as prescribed under the Unform Guidance. During the review of the award agreements, BDO identified the assistance listing numbers for the two awards had been modified. This issue resulted in a different major program selection once the SEFA was updated to reflect the correct assistance listing numbers. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend management to continue to focus on training for both preparer and reviewers of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section ?200.510(b). This will ensure that the SEFA provides all relevant information as proscribed.
See Schedule of Findings and Questioned Costs for chart/table Identification as a repeat finding: Elements of this finding are repeated elements of Finding 2021-002. Finding: Internal control processes over financial accounting did not ensure that the Schedule of Expenditures of Federal Awards (SEFA) provided for audit accurately identified federal expenditures in the year when the activity related to the federal award occurred. Criteria: The Organization is responsible for maintaining accurate information about all federal programs and reporting requirements. The Organization is responsible for using this information to prepare a complete and accurate SEFA on an annual basis in accordance with 2 CFR 200.502 in order to comply with reporting requirements associated with the use of federal funds under the Uniform Guidance. Sample Size and Population: N/A Condition and Context: The initial SEFA provided for audit contained the following errors: ? Contract 21-4619C-200 (ALN 21.027) was stated at the value of $647,709 of cash received in 2022 rather than the accrual value of expenditures in 2022. ? The CDBG (ALN 14.218) outstanding loan balance reported did not include the $430,156 outstanding at the beginning of the year per 2 CFR 500.502(b)(2). ? Contract DA21-1518 (ALN 14.231) was not included on the SEFA. Information on the SEFA is used for audit planning and by grantors. The use of incomplete or incorrect information on the SEFA can result in improper identification of major programs and related compliance requirements. Cause: Accrual accounting was not consistently applied in the preparation of the SEFA. These errors have been corrected in the attached SEFA and financial statements. Recommendation: The Organization must continue to increase its familiarity with federal grant compliance requirements and review contract terms and federal standards for reporting. These procedures should facilitate the Organization?s preparation of the SEFA so that annual expenditures for all grant programs are accurately included on the SEFA per 2 CFR 200.502 and so that the Organization?s ongoing compliance monitoring is accurate. Questioned Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration
See Schedule of Findings and Questioned Costs for chart/table Identification as a repeat finding: Elements of this finding are repeated elements of Finding 2021-002. Finding: Internal control processes over financial accounting did not ensure that the Schedule of Expenditures of Federal Awards (SEFA) provided for audit accurately identified federal expenditures in the year when the activity related to the federal award occurred. Criteria: The Organization is responsible for maintaining accurate information about all federal programs and reporting requirements. The Organization is responsible for using this information to prepare a complete and accurate SEFA on an annual basis in accordance with 2 CFR 200.502 in order to comply with reporting requirements associated with the use of federal funds under the Uniform Guidance. Sample Size and Population: N/A Condition and Context: The initial SEFA provided for audit contained the following errors: ? Contract 21-4619C-200 (ALN 21.027) was stated at the value of $647,709 of cash received in 2022 rather than the accrual value of expenditures in 2022. ? The CDBG (ALN 14.218) outstanding loan balance reported did not include the $430,156 outstanding at the beginning of the year per 2 CFR 500.502(b)(2). ? Contract DA21-1518 (ALN 14.231) was not included on the SEFA. Information on the SEFA is used for audit planning and by grantors. The use of incomplete or incorrect information on the SEFA can result in improper identification of major programs and related compliance requirements. Cause: Accrual accounting was not consistently applied in the preparation of the SEFA. These errors have been corrected in the attached SEFA and financial statements. Recommendation: The Organization must continue to increase its familiarity with federal grant compliance requirements and review contract terms and federal standards for reporting. These procedures should facilitate the Organization?s preparation of the SEFA so that annual expenditures for all grant programs are accurately included on the SEFA per 2 CFR 200.502 and so that the Organization?s ongoing compliance monitoring is accurate. Questioned Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration
See Schedule of Findings and Questioned Costs for chart/table Identification as a repeat finding: Elements of this finding are repeated elements of Finding 2021-002. Finding: Internal control processes over financial accounting did not ensure that the Schedule of Expenditures of Federal Awards (SEFA) provided for audit accurately identified federal expenditures in the year when the activity related to the federal award occurred. Criteria: The Organization is responsible for maintaining accurate information about all federal programs and reporting requirements. The Organization is responsible for using this information to prepare a complete and accurate SEFA on an annual basis in accordance with 2 CFR 200.502 in order to comply with reporting requirements associated with the use of federal funds under the Uniform Guidance. Sample Size and Population: N/A Condition and Context: The initial SEFA provided for audit contained the following errors: ? Contract 21-4619C-200 (ALN 21.027) was stated at the value of $647,709 of cash received in 2022 rather than the accrual value of expenditures in 2022. ? The CDBG (ALN 14.218) outstanding loan balance reported did not include the $430,156 outstanding at the beginning of the year per 2 CFR 500.502(b)(2). ? Contract DA21-1518 (ALN 14.231) was not included on the SEFA. Information on the SEFA is used for audit planning and by grantors. The use of incomplete or incorrect information on the SEFA can result in improper identification of major programs and related compliance requirements. Cause: Accrual accounting was not consistently applied in the preparation of the SEFA. These errors have been corrected in the attached SEFA and financial statements. Recommendation: The Organization must continue to increase its familiarity with federal grant compliance requirements and review contract terms and federal standards for reporting. These procedures should facilitate the Organization?s preparation of the SEFA so that annual expenditures for all grant programs are accurately included on the SEFA per 2 CFR 200.502 and so that the Organization?s ongoing compliance monitoring is accurate. Questioned Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration
Program Information: The Tennessee COVID-19 Health Disparities Initiative (ALN #93.391) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): L. Reporting- The auditee must prepare a schedule of expenditures of Federal awards (the ?SEFA?) 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 Basis for determining Federal awards expended. 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 Research and Development (?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 passthrough 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 Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 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. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414. Condition: The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year. Cause: Administrative oversight with respect to preparation of the SEFA. Effect or Potential Effect: The original draft SEFA was incomplete. Questioned Costs: None. Context: The original draft SEFA was incomplete. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the Organization enhance its procedures and internal controls with respect to preparation and review of the SEFA including a comparison of the general ledger to the SEFA to assess completeness. Views of Responsible Officials and Planned Corrective Actions: Management will review grant agreements to confirm whether funding received from private entities are federal funds that should be reported on the SEFA.
Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grants Assistance Listing Number: 14.228 Federal Award Identification Number and Year: B-21-DC-08-0001 - 2021 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number: F16CDB16602 Award Period: April 1, 2020 ? March 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: In accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), the Council should report all federal expenditures in the schedule of expenditures of federal awards (SEFA) each fiscal year. Additionally, per 2 CFR section 200.502(a)-(d), the determination of when a federal award is expended must be based on when the activity related to the federal award occurs, including the value of new loans made during the audit period. Condition: In reviewing the expenditure detail and supporting documentation for the 2022 SEFA, the Council had omitted approximately $726,000 of federal expenditures from the 2021 SEFA that were expended as part of the loan program in 2021. These loans were included in the SEFA for 2022 and audited as a major program for 2022. Questioned Costs: Unknown Context: The omission of expenditures from the 2021 SEFA was identified during testing of the current year major program. The seven omitted loans from 2021 were include in the 2022 loan activity for testing. Cause: In 2022, requests for reimbursement were submitted for certain loans distributed in 2021 that were not reflected on the 2021 SEFA. Effect: Excluding program expenditures from the SEFA results in the Council being out of compliance with the requirements of individual grant agreements and the Uniform Grant Guidance. Repeat Finding: No Recommendation: We recommend that the Council record federal expenditures on the SEFA under the program in the year upon which the loan disbursement occurs. Views of Responsible Officials: There is no disagreement with the audit finding.
Section III ? Federal Award Findings and Questioned Costs 2022-001 Internal Control over Compliance and Compliance with Reporting - Preparation of the Schedule of Expenditures of Federal Awards Information on the Major Federal Program ? General Services Administration Assistance Listing Number: 39.RD Assistance Listing Name: Advisory & Assistance Services Criteria - The Uniform Guidance in 2 CFR ?200.510 (b) states in part: ?The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR ?200.502 Basis for determining Federal awards expended.? Condition - Certain contract expenditures related to the Advisory & Assistance Services award with General Services Administration (GSA) were incorrectly reported in the initial SEFA. The total federal expenditures initially reported in the SEFA for this award totaled $3,719,891. However, based on testing by the auditors, contract expenditures totaling $3,119,210 were determined to not qualify for SEFA presentation based on CFR Section ?200.502 due to a certain task within the award being firm fixed price. Cause ? One task of the Advisory & Assistance Services award was incorrectly labeled as cost-reimbursable with the Organization?s accounting system. This error resulted in the Organization not following its policies and procedures in place to ensure compliance with the requirements regarding the preparation of the SEFA. Effect or Potential Effect - Failure to comply with the reporting requirements of the Uniform Guidance related to the preparation of the SEFA could result in expenses from Federal awards being inaccurately reported. Questioned Costs - None. Context - This is a condition identified based upon our review of the Organization?s compliance with specified requirements required based on CFR ?200.502. The prevalence of these findings is detailed in the condition section above. Repeat finding ? This is not a repeat finding. Recommendation ? We recommend that the Organization implement policies and procedures to ensure that Federal expenditures reported on the SEFA are properly included based on underlying Federal and award requirements. Views of Responsible Officials - Management agrees with the finding. The inclusion of the contract task was an oversight as the project type was mislabeled in the accounting system. Riverside will implement an additional review of projects created in the accounting system to ensure the reliance of the information to identify only the amount of Federal awards that are required to be reported under CFR ?200.502. Additionally, the one task of the Advisory & Assistance Services award that was the cause of the issue has been corrected within the accounting system.
Finding No. 2022-002: Incomplete Schedule of Expenditures of Federal Awards?Material Weakness and Material Noncompliance U.S Department of State (19.518) Overseas Refugee Assistance Programs for Western Hemisphere passed through from Asylum Access Criteria: 2 CFR Part 200.510 (b) requires that the Organization must prepare a Schedule of Expenditures of Federal Awards (SEFA) 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 Part 200.502. In a proper system of internal controls, the Organization is required to have procedures in place that correctly identify federal grants which are required to follow the compliance requirements of 2 CFR Part 200. Cause: The Organization did not properly identify a grant under Assistance Listing Number (ALN) 19.518 as being required to follow the requirements of 2 CFR Part 200 and, as a result, the initial SEFA omitted expenditures received under this grant. Condition: During our audit, we identified a grant under ALN 19.518 that is required to comply with the applicable requirements of 2 CFR Part 200 and thus should have been included in the SEFA. Effect: The Organization did not properly identify the applicability of 2 CFR Part 200 and thus a grant was improperly omitted from the initial SEFA. Once this grant was properly included, the Organization exceeded $750,000 in qualifying federal expenditures thus meeting the requirement for a Uniform Guidance audit to be required. Questioned costs: None Context: The Organization did not have a proper set of internal controls in place to appropriately identify the applicability of 2 CFR Part 200 to all federal awards. Repeat Finding?: No Recommendation: We recommend that management implement policies and procedures to evaluate all grants received to identify federal funding. Views of responsible officials: The Organization agrees with the finding. See corrective action plan.
Program Information: Temporary Assistance for Needy Families (ALN #93.558) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): L. Reporting- The auditee must prepare a schedule of expenditures of Federal awards (the ?SEFA?) 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 Basis for determining Federal awards expended. 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 Research and Development (?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 passthrough 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 Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 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. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414. Condition: The SEFA as prepared by management did not originally include all expenditures for one federal grant. Cause: Administrative oversight with respect to preparation of the SEFA. Effect or Potential Effect: The original draft SEFA was incomplete. Questioned Costs: None. Context: The original draft SEFA was incomplete. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to preparation and review of the SEFA. Views of Responsible Officials and Planned Corrective Actions: Grant agreements will be reviewed to confirm if expenditures from pass-through entities are related to federal or state grants, and appropriately include applicable federal grants in the SEFA.
Finding 2022-006: Federal Financial Reporting Requirements (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: Code of Federal Regulations (CFR) Section 200.303(b) requires non-federal entities to establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. CFR Section 200.502(a) states that the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. CFR Section 200.510 states that 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 CFR Section 200.502. Condition: The schedule of expenditures of federal awards for the year ended December 31, 2022, did not originally include indirect costs totaling $43,632. Questioned Costs: None Cause: FCE's management prepared the schedule of expenditures of federal awards using only direct costs. However, FCE had applied the 10-percent de minimis indirect cost rate when submitting its financial reports. Effect or Potential Effect: The exclusion of indirect costs caused inaccurate amounts to be reported in the SEFA at the start of the audit. This could have caused an inaccurate major program determination. Recommendation: FCE should implement a process for preparing the SEFA that includes comparing amounts reported in the SEFA to amounts included in financial reports of expenditures that are submitted to federal agencies.
2022-002 Material Weakness - Preparation of Schedule of Expenditures of Federal Awards (?SEFA?) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee?s responsibility to prepare the Schedule of Expenditures of Federal Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate schedule of expenditures of federal awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate schedule of expenditures of federal awards financial statement for major program compliance. For CFDA #66.458, the SEFA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFA. Uniform Guidance states that SEFA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2022. Recommendation: Procedures should be implemented to create a materially accurate schedule of expenditures of federal award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate schedule of expenditures of federal award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFA.
2022-002 Material Weakness - Preparation of Schedule of Expenditures of Federal Awards (?SEFA?) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee?s responsibility to prepare the Schedule of Expenditures of Federal Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate schedule of expenditures of federal awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate schedule of expenditures of federal awards financial statement for major program compliance. For CFDA #66.458, the SEFA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFA. Uniform Guidance states that SEFA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2022. Recommendation: Procedures should be implemented to create a materially accurate schedule of expenditures of federal award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate schedule of expenditures of federal award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFA.
2022-002 Material Weakness - Preparation of Schedule of Expenditures of Federal Awards (?SEFA?) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee?s responsibility to prepare the Schedule of Expenditures of Federal Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate schedule of expenditures of federal awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate schedule of expenditures of federal awards financial statement for major program compliance. For CFDA #66.458, the SEFA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFA. Uniform Guidance states that SEFA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2022. Recommendation: Procedures should be implemented to create a materially accurate schedule of expenditures of federal award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate schedule of expenditures of federal award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFA.