Finding 2021-003: Reconciliation of Accounts Material Weakness Federal Programs: Research and Development Cluster: 47.076 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, and for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,978. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 05/01/2024 Responsible Official: Michael Brosnan, CFO
Finding 2021-003: Reconciliation of Accounts Material Weakness Federal Programs: Research and Development Cluster: 47.076 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, and for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,978. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 05/01/2024 Responsible Official: Michael Brosnan, CFO
Finding 2021-003: Reconciliation of Accounts Material Weakness Federal Programs: Research and Development Cluster: 47.076 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, and for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,978. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 05/01/2024 Responsible Official: Michael Brosnan, CFO
Finding 2021-003: Reconciliation of Accounts Material Weakness Federal Programs: Research and Development Cluster: 47.076 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, and for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,978. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 05/01/2024 Responsible Official: Michael Brosnan, CFO
Finding 2021-003: Reconciliation of AccountsFederal Program: Research and Development Cluster (Education and Human Resources) Assistance Listing Number and Title: 47.076 STEM Education Name of Federal Agency, Pass Through Entity (when applicable), Award Number and Year: National Science Foundation: 1524963 (11/1/2015 – 9/30/2021), 1812860 (9/1/2018 – 8/31/2020) Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,822 in total. Assistance listing number 47.076. Of this amount, $62,403 applies to award ID 1505278, which was closed before 1/1/2021 and did not have expenses or drawdowns in 2021 but by the end of 2018 had $138,034 in federal funding provided to AAPT and $75,631 of reimbursable expenses. AAPT had not refunded the overpayment, such as by applying this $62,403 as a reduction in federal reimbursements drawn during 2021. The remaining amounts of $10,112 and $8,307 relate to award IDs 1812860, and 1524963, respectively, and were calculated in the same manner. The period of performance for award ID 1812860 ended on 8/31/2020. The period of performance for award ID 1524963 ended on 9/30/2021. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 10/15/2024 Responsible Official: Michael Brosnan, CFO
Finding 2021-003: Reconciliation of AccountsFederal Program: Research and Development Cluster (Education and Human Resources) Assistance Listing Number and Title: 47.076 STEM Education Name of Federal Agency, Pass Through Entity (when applicable), Award Number and Year: National Science Foundation: 1524963 (11/1/2015 – 9/30/2021), 1812860 (9/1/2018 – 8/31/2020) Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,822 in total. Assistance listing number 47.076. Of this amount, $62,403 applies to award ID 1505278, which was closed before 1/1/2021 and did not have expenses or drawdowns in 2021 but by the end of 2018 had $138,034 in federal funding provided to AAPT and $75,631 of reimbursable expenses. AAPT had not refunded the overpayment, such as by applying this $62,403 as a reduction in federal reimbursements drawn during 2021. The remaining amounts of $10,112 and $8,307 relate to award IDs 1812860, and 1524963, respectively, and were calculated in the same manner. The period of performance for award ID 1812860 ended on 8/31/2020. The period of performance for award ID 1524963 ended on 9/30/2021. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 10/15/2024 Responsible Official: Michael Brosnan, CFO
Finding 2021-001 Preparation of the Schedule Expenditures of Federal Awards – Material Weakness in Internal Control Over Compliance Program: U.S. Department of Health and Human Services HRSA COVID-19 Uninsured Program ALN 93.461 Award year: 2021 Criteria: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, Confluence Health (the Health System) is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Cause: The Health System did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Effect: The SEFA was revised to include $2,036,330 of expenditures related to ALN #93.461, HRSA COVID-19 Uninsured Program, which resulted in an additional major program and the reissuance of the 2021 reporting package. Additionally, it was determined that the Health System had not properly reported approximately $1.0 million in expenditures related to this same program in its prior year SEFA. Questioned Costs: Not applicable. Context: Factors contributing to the condition included the high volume of activity related to new COVID-19 programs and the lack of understanding that the related payments represented grant expenditures from a Federal source that were required to be reported on the SEFA. Repeat Finding: Not applicable. Recommendation: We recommend the Health System develop and implement a review process through the year to ensure compliance with SEFA reporting requirements as outlined in the Uniform Guidance. Views of Responsible Officials: Processes will be put in place to compile the SEFA, reconcile to support, and perform a related review prior to audit. This will allow all grants from a Federal source to be identified and tracked, ensuring completeness.
Federal Program Information U.S. Department of Housing and Urban Development Housing Trust Fund (ALN: 14.275) Criteria or specific requirement The Uniform Guidance 2 CFR section 200.303 states, “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).” The Uniform Guidance 2 CFR section 200.510 states, “(b) Schedule of expenditures of Federal awards. 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 §200.502 Basis for determining Federal awards expended.” Condition The Agency omitted federally-funded expenditures required to be reported as part of the Schedule for the year ended October 31, 2021. Cause The Agency’s internal controls in place over the preparation of the Schedule were not sufficient to accurately report all expenditures of federal awards. Effect The omission of expenditures resulted in a major program not being identified in a timely manner. Section III –Federal Awards Findings and Questioned Costs (continued) Questioned Costs None. Context Expenditures for ALN 14.275 Housing Trust Fund were understated by $53.3 million. Identification as a Repeat Finding, if applicable The finding is a repeat finding – Finding 2019-001 and Finding 2020-001. Recommendation The Agency should review its internal controls over the process of accumulating and reporting expenditures of federal awards. Views of Responsible Officials The Agency agrees with the finding and has developed internal controls to ensure accurate and complete reporting of federal expenditures.
Finding 2021-002 Federal Program: Transportation Infrastructure Finance and Innovation Act (TIFIA) Program ALN Number: 20.223 Federal Agency: U.S. Department of Transportation – Direct Program Federal Award Year: 2021 Grant number: N/A Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Conditions Found: The City did not have adequate internal controls related to the reporting of expenditures on the SEFA for the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program. In 2007, the City completed plans for the reconstruction of the Gerald Desmond Bridge (Harbor Bridge), which was a $1.6 billion design, development, and construction project that included multiple funding sources, including federal, state, and private funds. During fiscal year 2014, the City entered into a loan agreement with the U.S. Department of Transportation for $325,000,000 of TIFIA Program funds. During fiscal year 2020, the loan agreement was modified for $500,000,000 of TIFIA Program funds. The executed loan agreement contained a clause that the TIFIA Program loan funds were not available to be drawn until the Harbor Bridge was certified as substantially complete. In January 2021 (fiscal year 2021) the Harbor Bridge was certified as substantially complete and the TIFIA Program loan was made. As a result, the City should have reported the $500,000,000 TIFIA Program loan on the SEFA for the year ended September 30, 2021. Cause and Effect: In discussing these conditions with the City, they stated the error was primarily due to the TIFIA Program not being a traditional federal award where expenses were reimbursed as incurred. When the City certified the substantial completion of the Harbor Bridge project and the TIFIA Program loan was made during fiscal year 2021, the City was not aware the TIFIA Program loan was reportable on the SEFA. Additionally, the management review controls in place over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the City from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs: Not applicable. Statistical Sampling: Not applicable. Repeat Finding: A similar finding was reported in the prior year report. Recommendation: We recommend the City implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. View of Responsible Official: The Harbor Department was not aware that a TIFIA loan was required to be reported on the SEFA. Our understanding of the SEFA is to report the federal share of expenditures. TIFIA loan expenditures are comprised of the expenses for which no grant reimbursement was sought, therefore, these expenses are the cost share or local share, not the federal share. The Harbor Department now understands that all federal assistance including loans should be reported on the SEFA. KPMG has been the City’s auditor since 2001 and was aware of the TIFIA loan agreement in 2014 and the TIFIA loan draw down in 2021. KPMG did not inform us that the TIFIA loan was required to be reported on the SEFA when they performed the single audit in 2021.
Finding 2021-001 – Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness) in internal controls over compliance Federal Agency – U.S. Department of Health and Human Services AL Number - 93.498 Federal Program Title – COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Period – Period 1 Reporting (Period of Availability January 1, 2020 – June 30, 2021) Criteria: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Medical Center is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context: Because the Medical Center had never received a single audit before receiving funding from the COVID-19 programs, the Medical Center did not have sufficient controls to ensure the population to draft the SEFA included the correct expenditures that qualified as expenditure of a federal award during the period. The complicated Provider Relief Fund reporting periods resulted in a timing issue only. Questioned Costs: None noted. Cause: Factors contributing to the condition included the high volume of activity related to the new COVID-19 programs. Effect: As a result of the Medical Center’s inaccurate reporting of the PRF expenditures on the population used to draft the SEFA, the Medical Center’s 2021 SEFA was adjusted and completion of compliance related testing and reported had to be updated. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Medical Center develop and implement a review process throughout the year to ensure compliance with SEFA reporting requirements as outlined in Uniform Guidance. Views of responsible officials and planned corrective action: Any funds received in the future with unusual reporting requirements similar to these COVID funds will be reviewed in detail to ensure reporting is complete and accurate.
Finding 2021-002 Federal Program: Transportation Infrastructure Finance and Innovation Act (TIFIA) Program ALN Number: 20.223 Federal Agency: U.S. Department of Transportation – Direct Program Federal Award Year: 2021 Grant number: N/A Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (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. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Conditions Found: The City did not have adequate internal controls related to the reporting of expenditures on the SEFA for the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program. In 2007, the City completed plans for the reconstruction of the Gerald Desmond Bridge (Harbor Bridge), which was a $1.6 billion design, development, and construction project that included multiple funding sources, including federal, state, and private funds. During fiscal year 2014, the City entered into a loan agreement with the U.S. Department of Transportation for $325,000,000 of TIFIA Program funds. During fiscal year 2020, the loan agreement was modified for $500,000,000 of TIFIA Program funds. The executed loan agreement contained a clause that the TIFIA Program loan funds were not available to be drawn until the Harbor Bridge was certified as substantially complete. In January 2021 (fiscal year 2021) the Harbor Bridge was certified as substantially complete and the TIFIA Program loan was made. As a result, the City should have reported the $500,000,000 TIFIA Program loan on the SEFA for the year ended September 30, 2021. Cause and Effect: In discussing these conditions with the City, they stated the error was primarily due to the TIFIA Program not being a traditional federal award where expenses were reimbursed as incurred. When the City certified the substantial completion of the Harbor Bridge project and the TIFIA Program loan was made during fiscal year 2021, the City was not aware the TIFIA Program loan was reportable on the SEFA. Additionally, the management review controls in place over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the City from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs: Not applicable. Statistical Sampling: Not applicable. Repeat Finding: A similar finding was reported in the prior year report. Recommendation: We recommend the City implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. View of Responsible Official: The Harbor Department was not aware that a TIFIA loan was required to be reported on the SEFA. Our understanding of the SEFA is to report the federal share of expenditures. TIFIA loan expenditures are comprised of the expenses for which no grant reimbursement was sought, therefore, these expenses are the cost share or local share, not the federal share. The Harbor Department now understands that all federal assistance including loans should be reported on the SEFA. KPMG has been the City’s auditor since 2001 and was aware of the TIFIA loan agreement in 2014 and the TIFIA loan draw down in 2021. KPMG did not inform us that the TIFIA loan was required to be reported on the SEFA when they performed the single audit in 2021.
Finding 2021-001 – Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness) in internal controls over compliance Federal Agency – U.S. Department of Health and Human Services AL Number - 93.498 Federal Program Title – COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Period – Period 1 Reporting (Period of Availability January 1, 2020 – June 30, 2021) Criteria: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Medical Center is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context: Because the Medical Center had never received a single audit before receiving funding from the COVID-19 programs, the Medical Center did not have sufficient controls to ensure the population to draft the SEFA included the correct expenditures that qualified as expenditure of a federal award during the period. The complicated Provider Relief Fund reporting periods resulted in a timing issue only. Questioned Costs: None noted. Cause: Factors contributing to the condition included the high volume of activity related to the new COVID-19 programs. Effect: As a result of the Medical Center’s inaccurate reporting of the PRF expenditures on the population used to draft the SEFA, the Medical Center’s 2021 SEFA was adjusted and completion of compliance related testing and reported had to be updated. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Medical Center develop and implement a review process throughout the year to ensure compliance with SEFA reporting requirements as outlined in Uniform Guidance. Views of responsible officials and planned corrective action: Any funds received in the future with unusual reporting requirements similar to these COVID funds will be reviewed in detail to ensure reporting is complete and accurate.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
Finding 2021-010 – Lack of Internal Controls over the Schedule of Expenditures of Federal Awards PASS-THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance QUESTIONED COSTS: $0 Condition: During the review of 100% of federal expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA), federal programs were identified that were not accurately reported. Actual federal expenditures for the major federal program Assistance Listing 21.019 - Coronavirus Relief Fund were $2,024,981 and the County reported $193,762. Therefore, expenditures were understated $1,831,219 for the major federal program Coronavirus Relief Fund. Further, actual federal expenditures for Assistance Listing 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEMA DR-4438 were $0 and the County reported $109,550. Therefore, the expenditures were overstated by $109,550. Actual federal expenditures for Assistance Listing 97.042 - Emergency Management Performance Grants were $7,177 and the County reported $15,000. Therefore, expenditures were overstated by $7,823. Additionally, the county reported expenditures of the Social Security Administration, overstating expenditures $1,200, although considered federally sourced, expenditures should not be reported on the SEFA. Reported Total Expenditures of Federal Awards $ 343,373 Add: Coronavirus Relief Fund (21.019) 1,831,219 Less: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEMA DR-4438 (97.036) (109,550) Less: Emergency Management Performance Grants (97.042) ( 7,823) Less: Social Security Administration ( 1,200) Actual Federal Expenditures of Federal Awards $2,056,019 SEFA Understated $1,712,646 Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for federal awards. Effect of Condition: This resulted in a material misstatement of the County’s Schedule of Expenditures of Federal Awards and could increase the potential for material noncompliance. Recommendation: OSAI recommends the County design and implement internal controls to ensure accurate reporting of federal expenditures on the SEFA. Management Response: Chairman of the Board of County Commissioners: The BOCC will work to design and implement internal controls to ensure accurate reporting of federal expenditures on the SEFA and ensure compliance with federal requirements. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Further, Title 2 CFR 200 § 200.510(a)(b) Financial Statements reads as follows: (a) Financial statements. The auditee must prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The financial statements must be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, non-Federal entity-wide financial statements may also include departments, agencies, and other organizational units that have separate audits in accordance with §200.514 Scope of audit, paragraph (a) and prepare separate financial statements. (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736. The following misstatements were noted: • The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304. • The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226. • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227. • The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183. Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230. Furthermore, the County did not prepare Notes to the SEFA. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required. Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements. Management Response: District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations. District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI. District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements. County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA. County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy. County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510 (b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….] 2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…” Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states: Definitions of Objectives Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736. The following misstatements were noted: • The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304. • The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226. • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227. • The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183. Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230. Furthermore, the County did not prepare Notes to the SEFA. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required. Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements. Management Response: District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations. District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI. District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements. County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA. County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy. County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510 (b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….] 2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…” Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states: Definitions of Objectives Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
Completeness and accuracy of Schedule of Expenditures of Federal Awards (SEFA)- (Significant Deficiency) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: 2 CFR 200.510 Financial statements requires auditees to 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. The information presented should be consistent with the accounting records and other federal guidance. Condition: Not all federal expenditures were included on SEFA. Through our discussions with management, we identified federal expenditures that were excluded from SEFA. Cause The COVID-19 pandemic resulted in the receipt and expenditure of additional federal funds. There was a limited information regarding new awards and reliance on the prior year information. Effect A SEFA that is not complete and accurate could impact the scoping of an entity’s major programs and result in incomplete information being provided to the federal government.. Questioned Cost: None noted Recommendation: Review all grant agreements. Develop checklist of anticipated awards in advance of the year and also complete an interim SEFA to identify inconsistencies earlier in the fiscal year. We recommend a formal review of final year-end SEFA for completeness and accuracy evidenced by a formal sign-off/approval. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.
Finding 2021-006 – Lack of Internal Controls Over the Schedule of Expenditures of Federal Awards (SEFA) Condition: Total federal expenditures on the SEFA were understated by $375,034: • Expenditures reported on the SEFA for ALN 97.036 Disaster Grant – Public Assistance were $467,323. Actual federal expenditures obtained from the County’s records confirm $838,525 expended for an overstated variance of $371,202. • Expenditures reported on the SEFA for ALN 15.226 OMES/E911 GIS Tracking were $0. Actual federal expenditures obtained from the County’s records confirm $3,832 expended for an understated variance of $3,832. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures on the SEFA. Effect of Condition: This condition resulted in erroneous reporting and a material misstatement of the County’s SEFA and could result in material noncompliance. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Grant County. Internal control procedures should be designed and implemented to ensure accurate and timely reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: County Commissioner District 1: We will discuss the SEFA completion in County Officers’ meeting. I will search for resources to aid in the completion of the SEFA. County Commissioner District 2: I will educate myself and do everything possible to become familiar with the requirements of the SEFA. County Commissioner District 3: We will address this issue as a County in the officers’ meetings. County Clerk: We have increased our understanding of the reporting requirement of the SEFA. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads, in part, as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objective Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Reference Number: 2021-001 Type of Finding: Material Weakness and Material Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): 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). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule 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), Finance developed the Single Audit Expenditures Reporting Database (Database). Finance developed the Database to include all of the relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Due to the unprecedented impacts from the COVID-19 pandemic, the Employment Development Department (EDD) was unable to timely report to Finance through the Database with accurate and reliable federal cash basis expenditures for its largest federal award programs that it administers, the Unemployment Insurance (ALN 17.225) and Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (ALN 97.050) programs. The delay resulted in Finance being unable to compile and produce a complete and final approved Schedule until December 2022. Although initial estimated expenditure amounts were reported by EDD for both programs, $90.6 billion and $7.5 billion, respectively, the final amounts reported in the Schedule for both programs were ultimately updated to $92.7 billion and $6.5 billion, respectively. Cause Given the substantial increase in claimants seeking assistance under the Unemployment Insurance program resulting from the COVID-19 pandemic, EDD was overwhelmed with the overall administration of the Unemployment Insurance program. Also, EDD was still contending with accounting and control issues from the implementation of the State’s Financial Information System for California (FI$Cal), which replaced the legacy system. Effect The difficulties that EDD encountered from the COVID-19 pandemic and continuing FI$Cal implementation issues, resulted in the late reporting and submission of final federal cash basis expenditures to Finance. The untimely submission limited and constrained Finance from compiling and producing a final complete and accurate Schedule. Questioned Costs Questioned costs were not determinable. Recommendation EDD should continue to evaluate its existing process and controls related to its ability to properly account for, report, and timely submit complete and accurate federal award cash basis expenditures to the Database, which affords Finance the ability to timely compile and produce a final Schedule pursuant to the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan EDD agrees with this finding. The deferred transition to FI$Cal and the difficulties experienced thereafter have continued to cause EDD to be late with submitting year-end financials and its ability to submit timely the cash basis expenditures into the Single Audit Expenditures Reporting Database (Database). In addition, the onset of the COVID-19 pandemic created additional issues which ultimately impacted the EDD’s ability to submit timely year-end financials. However, the EDD is making progress and continues to gain ground in the department’s efforts to follow the State’s deadlines for submitting year-end financials and entering the cash basis expenditures into the Database. By the end of fiscal year 2021-22 and into fiscal year 2022-23, the EDD did a restructuring within the accounting area which realigned workload amongst the units and provided additional resources in critical areas. These changes will have a lasting effect and help the department to be better positioned going forward in processing the accounting workload and ultimately be able to catch up and submit year-end financials and enter the cash basis expenditures into the Database by the State’s deadlines. In addition, the EDD took lessons learned from the fiscal year 2019-20 financial audit to update processes and procedures and applied that knowledge going forward. Also, staff have been participating in various trainings offered by Finance and the Department of FISCal and staff continue to work with the control agencies when issues arise that would impact our accounting functions. While the EDD is still behind, the department is making great progress on catching up. The EDD submitted the last of its fiscal year 2020-21 financials in July 2022 and is targeting to submit the last of its fiscal year 2021-22 financials by the end of March 2023. The EDD’s goal is to submit fiscal year 2022-23 financials by the end of December 2023. Similar to the 2019-20 financial audit, the EDD will take the knowledge learned during the 2020-21 audit season, continue to engage with the control agencies, and continue to train and develop staff in order to keep progressing towards the department’s goal of becoming timely with the submission of the year-end financials and entering of the cash basis expenditures into the Database.
Reference Number: 2021-001 Type of Finding: Material Weakness and Material Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): 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). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule 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), Finance developed the Single Audit Expenditures Reporting Database (Database). Finance developed the Database to include all of the relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Due to the unprecedented impacts from the COVID-19 pandemic, the Employment Development Department (EDD) was unable to timely report to Finance through the Database with accurate and reliable federal cash basis expenditures for its largest federal award programs that it administers, the Unemployment Insurance (ALN 17.225) and Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (ALN 97.050) programs. The delay resulted in Finance being unable to compile and produce a complete and final approved Schedule until December 2022. Although initial estimated expenditure amounts were reported by EDD for both programs, $90.6 billion and $7.5 billion, respectively, the final amounts reported in the Schedule for both programs were ultimately updated to $92.7 billion and $6.5 billion, respectively. Cause Given the substantial increase in claimants seeking assistance under the Unemployment Insurance program resulting from the COVID-19 pandemic, EDD was overwhelmed with the overall administration of the Unemployment Insurance program. Also, EDD was still contending with accounting and control issues from the implementation of the State’s Financial Information System for California (FI$Cal), which replaced the legacy system. Effect The difficulties that EDD encountered from the COVID-19 pandemic and continuing FI$Cal implementation issues, resulted in the late reporting and submission of final federal cash basis expenditures to Finance. The untimely submission limited and constrained Finance from compiling and producing a final complete and accurate Schedule. Questioned Costs Questioned costs were not determinable. Recommendation EDD should continue to evaluate its existing process and controls related to its ability to properly account for, report, and timely submit complete and accurate federal award cash basis expenditures to the Database, which affords Finance the ability to timely compile and produce a final Schedule pursuant to the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan EDD agrees with this finding. The deferred transition to FI$Cal and the difficulties experienced thereafter have continued to cause EDD to be late with submitting year-end financials and its ability to submit timely the cash basis expenditures into the Single Audit Expenditures Reporting Database (Database). In addition, the onset of the COVID-19 pandemic created additional issues which ultimately impacted the EDD’s ability to submit timely year-end financials. However, the EDD is making progress and continues to gain ground in the department’s efforts to follow the State’s deadlines for submitting year-end financials and entering the cash basis expenditures into the Database. By the end of fiscal year 2021-22 and into fiscal year 2022-23, the EDD did a restructuring within the accounting area which realigned workload amongst the units and provided additional resources in critical areas. These changes will have a lasting effect and help the department to be better positioned going forward in processing the accounting workload and ultimately be able to catch up and submit year-end financials and enter the cash basis expenditures into the Database by the State’s deadlines. In addition, the EDD took lessons learned from the fiscal year 2019-20 financial audit to update processes and procedures and applied that knowledge going forward. Also, staff have been participating in various trainings offered by Finance and the Department of FISCal and staff continue to work with the control agencies when issues arise that would impact our accounting functions. While the EDD is still behind, the department is making great progress on catching up. The EDD submitted the last of its fiscal year 2020-21 financials in July 2022 and is targeting to submit the last of its fiscal year 2021-22 financials by the end of March 2023. The EDD’s goal is to submit fiscal year 2022-23 financials by the end of December 2023. Similar to the 2019-20 financial audit, the EDD will take the knowledge learned during the 2020-21 audit season, continue to engage with the control agencies, and continue to train and develop staff in order to keep progressing towards the department’s goal of becoming timely with the submission of the year-end financials and entering of the cash basis expenditures into the Database.
Reference Number: 2021-001 Type of Finding: Material Weakness and Material Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): 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). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule 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), Finance developed the Single Audit Expenditures Reporting Database (Database). Finance developed the Database to include all of the relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Due to the unprecedented impacts from the COVID-19 pandemic, the Employment Development Department (EDD) was unable to timely report to Finance through the Database with accurate and reliable federal cash basis expenditures for its largest federal award programs that it administers, the Unemployment Insurance (ALN 17.225) and Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (ALN 97.050) programs. The delay resulted in Finance being unable to compile and produce a complete and final approved Schedule until December 2022. Although initial estimated expenditure amounts were reported by EDD for both programs, $90.6 billion and $7.5 billion, respectively, the final amounts reported in the Schedule for both programs were ultimately updated to $92.7 billion and $6.5 billion, respectively. Cause Given the substantial increase in claimants seeking assistance under the Unemployment Insurance program resulting from the COVID-19 pandemic, EDD was overwhelmed with the overall administration of the Unemployment Insurance program. Also, EDD was still contending with accounting and control issues from the implementation of the State’s Financial Information System for California (FI$Cal), which replaced the legacy system. Effect The difficulties that EDD encountered from the COVID-19 pandemic and continuing FI$Cal implementation issues, resulted in the late reporting and submission of final federal cash basis expenditures to Finance. The untimely submission limited and constrained Finance from compiling and producing a final complete and accurate Schedule. Questioned Costs Questioned costs were not determinable. Recommendation EDD should continue to evaluate its existing process and controls related to its ability to properly account for, report, and timely submit complete and accurate federal award cash basis expenditures to the Database, which affords Finance the ability to timely compile and produce a final Schedule pursuant to the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan EDD agrees with this finding. The deferred transition to FI$Cal and the difficulties experienced thereafter have continued to cause EDD to be late with submitting year-end financials and its ability to submit timely the cash basis expenditures into the Single Audit Expenditures Reporting Database (Database). In addition, the onset of the COVID-19 pandemic created additional issues which ultimately impacted the EDD’s ability to submit timely year-end financials. However, the EDD is making progress and continues to gain ground in the department’s efforts to follow the State’s deadlines for submitting year-end financials and entering the cash basis expenditures into the Database. By the end of fiscal year 2021-22 and into fiscal year 2022-23, the EDD did a restructuring within the accounting area which realigned workload amongst the units and provided additional resources in critical areas. These changes will have a lasting effect and help the department to be better positioned going forward in processing the accounting workload and ultimately be able to catch up and submit year-end financials and enter the cash basis expenditures into the Database by the State’s deadlines. In addition, the EDD took lessons learned from the fiscal year 2019-20 financial audit to update processes and procedures and applied that knowledge going forward. Also, staff have been participating in various trainings offered by Finance and the Department of FISCal and staff continue to work with the control agencies when issues arise that would impact our accounting functions. While the EDD is still behind, the department is making great progress on catching up. The EDD submitted the last of its fiscal year 2020-21 financials in July 2022 and is targeting to submit the last of its fiscal year 2021-22 financials by the end of March 2023. The EDD’s goal is to submit fiscal year 2022-23 financials by the end of December 2023. Similar to the 2019-20 financial audit, the EDD will take the knowledge learned during the 2020-21 audit season, continue to engage with the control agencies, and continue to train and develop staff in order to keep progressing towards the department’s goal of becoming timely with the submission of the year-end financials and entering of the cash basis expenditures into the Database.
Reference Number: 2021-002 Type of Finding: Material Weakness and Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): 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). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings 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. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule in accordance with the requirements of 2 CFR 200.510, Finance developed the Single Audit Expenditures Reporting Database (Database) to include all relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Departments are given access to the centralized Database by Finance in order to upload and report federal award information for all federal award programs which they administer. The California Department of Public Health (Public Health) failed to include $479,996,082 of federal expenditures and $367,405,431 of subrecipient expenditures for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program (ALN No. 93.323) in the Database, which Finance uses to prepare the State’s annual Schedule. The error resulted in an additional major program that had to be audited in accordance with the Uniform Guidance and the State having to re-issue its federal compliance audit report for the fiscal year ended June 30, 2021. Cause Public Health entered into a Bona Fide Agent Designation arrangement with Public Health Foundation Enterprises, Inc., dba Heluna Health, for the submission of a grant application under the State of California’s eligibility in lieu of a direct State application for the U.S. Department of Health and Human Services (HHS), Centers for Disease Control and Prevention (CDC) funding opportunity: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Cooperative Agreement. Subsequent to the bona fide agent arrangement, Public Health entered into a separate subrecipient agreement with Heluna Health on March 2, 2021, to provide Heluna Health with certain services related to the performance of its obligations under the ELC program grant award received from HHS. Since Public Health is typically not a subrecipient of federal awards and the accounting control for ELC program revenues and expenditures was established within the State’s General Fund rather than the Federal Trust Fund, which is State standard operating procedure, Public Health failed to identify and report the $479,996,082 of federal expenditures in the Schedule. Effect Because of the ELC program’s inclusion in the State’s Schedule for the fiscal year ended June 30, 2021, the ELC program had to be audited as a major program under requirements of the Uniform Guidance and the State’s federal compliance report had to be reissued. Questioned Costs No questioned costs were identified. Recommendation When infrequent and unusual arrangements occur impacting processes and procedures surrounding federal award programs, Public Health should ensure there is sufficient identification and understanding of the administrative and operational changes from standard operating procedures. Public Health should then design appropriate internal controls commensurate with such changes to ensure adherence to applicable laws and regulations. Views of Responsible Officials and Corrective Action Plan Management's response is reported in "Management's Response and Corrective Action Plan" included in a separate section at the end of this report.
Finding 2021-008 Improper Preparation of Schedule of Expenditures of Federal Awards U.S. Department of Health and Human Services COVID-19: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund – Assistance Listing Number 93.461 Criteria: In accordance with 2 CFR 200 200.510(b), the auditee must prepare a 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. Condition: The Corporation’s SEFA for the year ended June 30, 2021, was initially prepared without federal expenditures totaling $1,222,859 for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund, Assistance Listing number 93.461. Cause: The federal program expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund, Assistance Listing number 93.461, were omitted from the SEFA due to an oversight in the preparation of the SEFA. Effect: Improper reporting of federal expenditures resulted in a material error on the SEFA leading to inaccurate major program determination by the auditors. In this instance, the error did result in the identification of an additional major program. Questioned costs: None. Identification as a repeat finding, if applicable: 2020-005 Recommendation: We recommend the Corporation enhance the process and internal controls around the timely identification of federal awards and preparation of the SEFA to ensure accuracy and completeness of the SEFA. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
Finding 2021-010 – Lack of Internal Controls Over Schedule of Expenditures of Federal Awards PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma Cares PPE – Reimbursement 2020; 4530-DR-OK SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our audit, we identified federal programs that were not listed accurately on the County’s Schedule of Expenditures of Federal Awards (SEFA). Federal expenditures were understated by $532,307. The following misstatements were noted: Expenditures: • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $774,579, the County reported $241,966, which understated expenditures by $532,613. • The actual expenditures for Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027, were $2,437, the County reported $2,807, which overstated expenditures by $370. • The actual expenditures for FEMA – Public Assistance DR-4438, Disaster Grants – Public Assistance (Presidentially Declared Disasters), ALN 97.036, were $$60,394, the County reported $46,703, which understated expenditures by $13,691. • The actual expenditures of FEMA – Category B DR-4438 ALN 97.067 were $0, the County reported $8,342, which overstated expenditures by $8,342. • The actual expenditures for FEMA – Public Assistance OEM DR – 4453 ALN 97.036 were $0, the County reported $870, which overstated expenditures by $870. • The actual expenditures for COVID-19 FEMA-Public Assistance DR-4530, Disaster Grants – Public Assistance (Presidentially Declared Disasters), ALN 97.036, were $28,063, the County reported $21,047, which understated expenditures by $7,016. • The actual expenditures for Emergency Management Performance Grant, ALN 97.042, were $45,000, the County reported $56,250, which overstated expenditures by $11,250. • The actual expenditures for Fire Management Assistance Grand, ALN 97.046, were $0, the County reported $181, which overstated expenditures by $181. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of expenditures for federal awards. Effect of Condition: These conditions resulted in the misstatement of the expenditures reported on the County’s SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Washington County. Internal control procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: District 1 County Commissioner: Not by way of excuse, but truly in response, the Federal programs associated with the COVID response were unnecessarily arduous and created confusion at all levels of government. While the monetary response was accepted, the premise of these programs was nothing more than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then “final interim” and finally, “final” (redundancy intentional). The intent of our national level leadership became more apparent as these programs progressed with each iteration of programming being reliant on returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of their planning with these programs, will be found as fully compliant. As these programs have a sunset in the near term, I suspect these findings will disappear. District 2 County Commissioner: I was not in office at this time; however, I will work with other elected officials, county officials and department heads to ensure there is an understanding of federal programs awarded to Washington County, and the use of internal control procedures designed and implemented to ensure accurate reporting of expenditures and revenues on the SEFA and to ensure compliance with federal requirements. District 3 County Commissioner: These programs are temporary and difficult to navigate through. I will continue to press staff to report effectively as possible and to be responsive to specific requests that are made. County Clerk: I will work with the other Elected Officials to gain a better understanding of federal programs that are awarded to our County. I will work with the other offices to implement internal controls to ensure accurate reporting on the SEFA. County Sheriff: I have and will continue to work toward compliance in these areas of SEFA. I will continue to work with the other elected officials to gain proper understanding of Federal Programs and Requirements. Criteria: Title 2 CFR 200 § 200.210(a)(b) Financial Statements reads as follows: (a) Financial statements. The auditee must prepare financial statements that reflect its financial position, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year audited. The financial statements must be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, non-Federal entity-wide financial statements may also include departments, agencies, and other organizational units that have separate audits in accordance with §200.514 Scope of audit, paragraph (a) and prepare separate financial statements. (b) Schedule of expenditures of federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statement, which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510 (b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….] Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states: Definitions of Objectives Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standardsetting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the College’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 ALN number or other identifying number when the ALN information is not available. (4) Include the total amount provided to subrecipients from each federal program. (5) For loan or loan guarantee programs described in § 200.502 basis for determining federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the Schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The College’s internal control procedures did not identify $839,935 of expenses in the Schedule of Expenditures of Federal Awards related to the CARES Act grant. Adjustments, to which management have agreed, are reflected in the accompanying Schedule. We recommend that management continue to analyze the federal revenues and expenditures and include them in the proper period for audit.
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the College’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 ALN number or other identifying number when the ALN information is not available. (4) Include the total amount provided to subrecipients from each federal program. (5) For loan or loan guarantee programs described in § 200.502 basis for determining federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the Schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The College’s internal control procedures did not identify $839,935 of expenses in the Schedule of Expenditures of Federal Awards related to the CARES Act grant. Adjustments, to which management have agreed, are reflected in the accompanying Schedule. We recommend that management continue to analyze the federal revenues and expenditures and include them in the proper period for audit.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.
Finding 2021-004 – Internal Controls and Noncompliance Over the Schedule of Expenditures of Federal Awards (SEFA) PASS THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the Schedule of Expenditures of Federal Awards (SEFA) as initially prepared by the County, we identified federal programs that were not listed accurately which resulted in federal expenditures being understated by $180,089. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of the federal expenditures on the SEFA. This condition could result in the failure to identify Single Audit requirements. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Choctaw County. Internal control policies and procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: We will adopt procedures and implement to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. County Clerk: We will pay more attention to what is being put on SEFA schedule. County Treasurer: I will do my part in correcting this issue to make sure that all qualifying expenditures are reported accurately in the future. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System - Objectives of an Entity - OV2.23 states in part: Compliance Objective Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] 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. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.