2023-044 The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the Immunization Cooperative Agreements program. Assistance Listing Number and Title: 93.268 Immunization Cooperative Agreements 93.268 COVID-19 Immunization Cooperative Agreements Federal Grantor Name: U.S Department of Health and Human Services Federal Award/Contract Number: 6NH231IP922619-04-01; 5 NH23IP922619-04-00;6 NH23IP922619-02-04; 6 NH23IP922619-02-06; 6 NH23IP922619-02-03; 6 NH23IP922619-02-02 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Known Questioned Cost Amount: $416,027 Prior Year Audit Finding: Yes, Finding 2022-031 Background The Department of Health administers the Immunization Cooperative Agreements program, which aims to reduce and ultimately eliminate vaccine-preventable diseases by increasing and maintaining high immunization coverage. Emphasis is placed on populations at highest risk for underimmunization and disease, including children eligible under the Vaccines for Children program. In fiscal year 2023, the Department spent more than $24.6 million in federal program funds, about $8.5 million of which it disbursed to subrecipients. The Department also received more than $97.6 million in non-cash assistance from the federal grantor in the form of vaccines. To help carry out the program’s objectives, the Department issues consolidated contracts to Local Health Jurisdictions that are classified as subrecipients. A consolidated contract is for one subrecipient that combines funding for multiple federal programs. Each federal grant specifies a performance period during which recipients must obligate and liquidate program costs. The periods for this program are July 1 through June 30 of the associated fiscal year. Payments for costs charged before a grant’s beginning date or after the ending date are not allowed without the grantor’s prior approval. Subrecipients are awarded federal funds on a reimbursement basis only. The Department assigns each subrecipient a risk level based on standardized criteria, and it maintains a matrix that specifies the documentation that subrecipients at each risk level are required to submit with every reimbursement. There are varying requirements among low, moderate and high-risk subrecipients for each of the following expense categories: • Salaries and benefits • Equipment ($5,000 or more) • Materials and supplies • Meals • Outreach materials • Travel • Training • Contracts • Sub-subrecipients • Administrative/indirect costs During the audit period, subrecipients submitted invoices to the Department’s accounting unit where staff, on a weekly basis, compiled a list of all consolidated contract invoices into one email. The accounting unit emailed the requests to Department program staff requesting review to ensure the payment was allowable and within the period of performance. The emails consisted of 30 to 50 invoice requests with hundreds of pages of supporting documentation. Each invoice listed in the email would be considered approved if program staff did not respond. To address concerns about an invoice, program staff were required to email the accounting unit within 10 business days to withhold payment until the items in question were resolved. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Department did not have adequate internal controls over and did not comply with requirements to ensure payments to providers were allowable, met cost principles and were within the period of performance for the program. The prior finding number was 2022-031. Description of Condition The Department did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the program. Department program staff were required to use the documentation matrix when reviewing subrecipient payments to ensure they were for allowable activities, met cost principles, were within the period of performance and included required supporting documentation. However, program staff did not communicate their approval to the accounting unit that issues payment. As a result, the Department paid the subrecipients without knowing whether these expenditures had been reviewed and approved by program staff. We used a statistical sampling method to randomly select and examine 56 out of 681 provider payments. Additionally, we judgmentally reviewed two individually significant payments that exceeded $476,000 each. In total, we examined more than $2.4 million in provider payments as part of the audit. Of the 58 payments examined, we identified seven payments (12.5 percent) and one individually significant payment that did not have the required supporting documentation for the subrecipients’ assigned risk level. In addition, we judgmentally selected and examined six high-risk transactions out of a population of 1,293 expenditures charged to the federal fiscal year 2023 award that opened during the audit period. We found four expenditures that were improperly charged to the grant because the activity occurred before the period of performance. We also judgmentally selected and examined two out of a population of 167 expenditures charged to the federal fiscal year 2022 award that closed during the audit period. We found one expenditure was improperly charged to the grant because the activity occurred after the period of performance. We consider these internal control deficiencies to be a material weakness. Cause of Condition The Department’s established procedures allowed for paying providers without ensuring program staff reviewed and determined the payment was allowable, within the period of performance, and adequately supported. Furthermore, program management did not ensure staff followed the existing review procedures. Additionally, the Department did not ensure that expenditures that were cost allocated and directly charged during the opening and closing of awards were within the award’s period of performance. Effect of Condition and Questioned Costs Without establishing adequate internal controls, the Department cannot reasonably ensure it is using federal funds for allowable purposes and within the period of performance. By not ensuring subrecipients submitted required supporting documentation, staff could not adequately verify the reimbursement claims, and the Department could not ensure its subrecipients complied with the subaward’s terms and conditions. The eight payments for which the Department did not have required supporting documentation from subrecipients totaled $404,592 in known questioned costs. Based on these results, we estimate that the total amount of likely improper payments using federal funds to be $588,502. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our “best estimate of total questioned costs,” as required by 2 CFR § 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. For the federal fiscal year award 2023 that opened during the audit period, we identified questioned costs totaling $3,852. For the federal fiscal year 2022 award that closed during our audit period, we identified questioned costs totaling $7,583. In total, we identified $416,027 in known federal questioned costs and $599,937 in likely questioned costs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: • Improve internal controls to ensure that it obtains adequate supporting documentation from subrecipients before reimbursing them • Improve internal controls to ensure program staff review, approve, and communicate approval of expenditures to those issuing payment to verify they are for allowable activities and within the period of performance prior to payment • Improve its internal controls to ensure expenditures charged at the beginning and end of an award are within the period of performance • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department’s Response We appreciate the State Auditor’s Office audit of the Immunizations grant. DOH is committed to ensuring our programs comply with federal regulations. The Department does not concur with the finding. While the Department has taken steps to ensure payments to providers contain proper support in line with our A19 matrix for risk assessed of our subrecipients, we continue to disagree with SAO’s assessment of a material weakness in internal controls over the consolidated contract provider payment process. As noted in the finding, program staff now document their review and approval of consolidated contract reimbursement requests. If the payment has no issues or concerns, the total payment is logged in a spreadsheet with documented review and approval to denote no issues and that full payment can be made. If there is a question on allowable cost, period of performance, a need for additional backup or an error, program Immunization staff will update spreadsheet with the amounts in question and communicate with the Local Health Jurisdiction, document the correspondence, and contact the accounting consolidated contract payment desk to withhold the specific amount of payment until the issue is resolved. Once resolved staff update the spreadsheet to denote the issue has been resolved and email accounting to release the payment amount in question. The defined process of consolidated contract payments has been in place for well over a decade and was implemented in response to issues arising with timely payment of funds to our local government partners. The consolidated contracts are an essential tool in providing such funding on a large scale. This process balances many needs in tracking payments, providing documentation to the programs for review as well as allowing for timely distribution of funding to the local health jurisdictions (LHJs) for state and federal programs in order to serve the residents of the State of Washington. It also simplifies the invoicing and payment process as well as reconciliation between DOH and the LHJs. We do not concur with several of the exceptions and questioned costs identified. The Department believes there was a lack of understanding of DOH process related to allocation of space costs and how overtime is earned and accounted for according the Collective Bargaining Agreement. Additionally, while in some instances the level of support did not meet our internal policies, which are held to a higher standard than federal requirements, the level of documentation received from the subrecipient accounting system gave us assurance that the transactions/costs questioned met federal cost principles for allowability and period of performance. This, along with the following additional overall internal monitoring and policy processes support our overall assurance of the allowability of payments: • The Immunization program staff maintain detailed budget information for each subrecipient by project area, and as A-19s are submitted, program and accounting staff update budget spreadsheets. When reviewing the support provided by the subrecipient, they ensure amounts submitted by project are reasonable and are in alignment with expectations for the budget period submitted. • The Immunization program refer to the federal Immunization Program Operations Manual (IPOM) to determine allowable costs, purchase, and procurement procedures. •The Fiscal Monitoring Unit provides technical assistance and training, not only to program staff, but to the subrecipients while onsite and at the request of the entities receiving funding. • The Immunizations program provides technical assistance, policies, and training to Immunization subrecipients related to both allowability and compliance. • The Immunizations program has continued to strengthen processes to ensure that the backup documentation received is in alignment with the agency’s documentation matrix for sub-recipients per their risk level. Auditor’s Remarks While management has implemented a new procedure for program staff to document their review and approval of subrecipient reimbursement requests, this approval is not communicated to fiscal staff before payments are issued. As a result, approval is assumed and not verified by fiscal staff when no response is received from the program staff. The amount of supporting documentation submitted by a subrecipient utilizing consolidated contracts is extensive and often covers multiple reimbursement requests for more than one federally funded program. In our judgment, this increases the risk that a proper review is not performed before payments are issued. The Department did not concur with some of the identified exceptions and stated it believed it was due to our Office’s lack of understanding of their processes. This assertion is not accurate. We understand their processes, but four of the exceptions were payments for services that occurred prior to the grant being open (expenses were for the month of June 2022, but the award opened July 1, 2022. These four exceptions included the “allocation of space costs and how overtime is earned and accounted for” referred to in the Department’s response. These exceptions were discussed in detail with the Department and during these discussions the Department mistakenly asserted that the time of payment was what determined compliance, not when the activity occurred. This is not correct and may be part of why the Department did not concur with the exceptions. We reaffirm our finding and will follow up on the status of the Department’s corrective action during our next audit period. Applicable Laws and Regulations 45 U.S. Code of Federal Regulations (CFR) Part 75, section 2, Definitions, includes the definition of improper payment. Title 45 CFR Part 75, section 303, Internal Controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 45 CFR Part 75, section 403, Factors Affecting Allowability of Costs. 45 CFR Part 75, section 410, Collection of Unallowable Costs Title 45 CFR Part 75, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Washington State Department of Health A-19 Documentation Matrix Approved by FMU 7/1/22 This is the backup documentation required based on the determined risk level. More supporting documentation may be requested by programs at any time regardless of risk category. Please review your statement of work to determine if there are additional documentation requirements. NOTE: Indirect costs included on A19s must include verification of the following: • Indirect plan is current and on file with DOH • Indirect rate is being applied accurately to allowable expenditures • If the indirect cost rate plan has expired, no indirect costs can be charged If the subrecipient is using 10% de minimis they must complete DOH de minimis certification
2023-044 The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the Immunization Cooperative Agreements program. Assistance Listing Number and Title: 93.268 Immunization Cooperative Agreements 93.268 COVID-19 Immunization Cooperative Agreements Federal Grantor Name: U.S Department of Health and Human Services Federal Award/Contract Number: 6NH231IP922619-04-01; 5 NH23IP922619-04-00;6 NH23IP922619-02-04; 6 NH23IP922619-02-06; 6 NH23IP922619-02-03; 6 NH23IP922619-02-02 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Known Questioned Cost Amount: $416,027 Prior Year Audit Finding: Yes, Finding 2022-031 Background The Department of Health administers the Immunization Cooperative Agreements program, which aims to reduce and ultimately eliminate vaccine-preventable diseases by increasing and maintaining high immunization coverage. Emphasis is placed on populations at highest risk for underimmunization and disease, including children eligible under the Vaccines for Children program. In fiscal year 2023, the Department spent more than $24.6 million in federal program funds, about $8.5 million of which it disbursed to subrecipients. The Department also received more than $97.6 million in non-cash assistance from the federal grantor in the form of vaccines. To help carry out the program’s objectives, the Department issues consolidated contracts to Local Health Jurisdictions that are classified as subrecipients. A consolidated contract is for one subrecipient that combines funding for multiple federal programs. Each federal grant specifies a performance period during which recipients must obligate and liquidate program costs. The periods for this program are July 1 through June 30 of the associated fiscal year. Payments for costs charged before a grant’s beginning date or after the ending date are not allowed without the grantor’s prior approval. Subrecipients are awarded federal funds on a reimbursement basis only. The Department assigns each subrecipient a risk level based on standardized criteria, and it maintains a matrix that specifies the documentation that subrecipients at each risk level are required to submit with every reimbursement. There are varying requirements among low, moderate and high-risk subrecipients for each of the following expense categories: • Salaries and benefits • Equipment ($5,000 or more) • Materials and supplies • Meals • Outreach materials • Travel • Training • Contracts • Sub-subrecipients • Administrative/indirect costs During the audit period, subrecipients submitted invoices to the Department’s accounting unit where staff, on a weekly basis, compiled a list of all consolidated contract invoices into one email. The accounting unit emailed the requests to Department program staff requesting review to ensure the payment was allowable and within the period of performance. The emails consisted of 30 to 50 invoice requests with hundreds of pages of supporting documentation. Each invoice listed in the email would be considered approved if program staff did not respond. To address concerns about an invoice, program staff were required to email the accounting unit within 10 business days to withhold payment until the items in question were resolved. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Department did not have adequate internal controls over and did not comply with requirements to ensure payments to providers were allowable, met cost principles and were within the period of performance for the program. The prior finding number was 2022-031. Description of Condition The Department did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the program. Department program staff were required to use the documentation matrix when reviewing subrecipient payments to ensure they were for allowable activities, met cost principles, were within the period of performance and included required supporting documentation. However, program staff did not communicate their approval to the accounting unit that issues payment. As a result, the Department paid the subrecipients without knowing whether these expenditures had been reviewed and approved by program staff. We used a statistical sampling method to randomly select and examine 56 out of 681 provider payments. Additionally, we judgmentally reviewed two individually significant payments that exceeded $476,000 each. In total, we examined more than $2.4 million in provider payments as part of the audit. Of the 58 payments examined, we identified seven payments (12.5 percent) and one individually significant payment that did not have the required supporting documentation for the subrecipients’ assigned risk level. In addition, we judgmentally selected and examined six high-risk transactions out of a population of 1,293 expenditures charged to the federal fiscal year 2023 award that opened during the audit period. We found four expenditures that were improperly charged to the grant because the activity occurred before the period of performance. We also judgmentally selected and examined two out of a population of 167 expenditures charged to the federal fiscal year 2022 award that closed during the audit period. We found one expenditure was improperly charged to the grant because the activity occurred after the period of performance. We consider these internal control deficiencies to be a material weakness. Cause of Condition The Department’s established procedures allowed for paying providers without ensuring program staff reviewed and determined the payment was allowable, within the period of performance, and adequately supported. Furthermore, program management did not ensure staff followed the existing review procedures. Additionally, the Department did not ensure that expenditures that were cost allocated and directly charged during the opening and closing of awards were within the award’s period of performance. Effect of Condition and Questioned Costs Without establishing adequate internal controls, the Department cannot reasonably ensure it is using federal funds for allowable purposes and within the period of performance. By not ensuring subrecipients submitted required supporting documentation, staff could not adequately verify the reimbursement claims, and the Department could not ensure its subrecipients complied with the subaward’s terms and conditions. The eight payments for which the Department did not have required supporting documentation from subrecipients totaled $404,592 in known questioned costs. Based on these results, we estimate that the total amount of likely improper payments using federal funds to be $588,502. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our “best estimate of total questioned costs,” as required by 2 CFR § 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. For the federal fiscal year award 2023 that opened during the audit period, we identified questioned costs totaling $3,852. For the federal fiscal year 2022 award that closed during our audit period, we identified questioned costs totaling $7,583. In total, we identified $416,027 in known federal questioned costs and $599,937 in likely questioned costs. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: • Improve internal controls to ensure that it obtains adequate supporting documentation from subrecipients before reimbursing them • Improve internal controls to ensure program staff review, approve, and communicate approval of expenditures to those issuing payment to verify they are for allowable activities and within the period of performance prior to payment • Improve its internal controls to ensure expenditures charged at the beginning and end of an award are within the period of performance • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department’s Response We appreciate the State Auditor’s Office audit of the Immunizations grant. DOH is committed to ensuring our programs comply with federal regulations. The Department does not concur with the finding. While the Department has taken steps to ensure payments to providers contain proper support in line with our A19 matrix for risk assessed of our subrecipients, we continue to disagree with SAO’s assessment of a material weakness in internal controls over the consolidated contract provider payment process. As noted in the finding, program staff now document their review and approval of consolidated contract reimbursement requests. If the payment has no issues or concerns, the total payment is logged in a spreadsheet with documented review and approval to denote no issues and that full payment can be made. If there is a question on allowable cost, period of performance, a need for additional backup or an error, program Immunization staff will update spreadsheet with the amounts in question and communicate with the Local Health Jurisdiction, document the correspondence, and contact the accounting consolidated contract payment desk to withhold the specific amount of payment until the issue is resolved. Once resolved staff update the spreadsheet to denote the issue has been resolved and email accounting to release the payment amount in question. The defined process of consolidated contract payments has been in place for well over a decade and was implemented in response to issues arising with timely payment of funds to our local government partners. The consolidated contracts are an essential tool in providing such funding on a large scale. This process balances many needs in tracking payments, providing documentation to the programs for review as well as allowing for timely distribution of funding to the local health jurisdictions (LHJs) for state and federal programs in order to serve the residents of the State of Washington. It also simplifies the invoicing and payment process as well as reconciliation between DOH and the LHJs. We do not concur with several of the exceptions and questioned costs identified. The Department believes there was a lack of understanding of DOH process related to allocation of space costs and how overtime is earned and accounted for according the Collective Bargaining Agreement. Additionally, while in some instances the level of support did not meet our internal policies, which are held to a higher standard than federal requirements, the level of documentation received from the subrecipient accounting system gave us assurance that the transactions/costs questioned met federal cost principles for allowability and period of performance. This, along with the following additional overall internal monitoring and policy processes support our overall assurance of the allowability of payments: • The Immunization program staff maintain detailed budget information for each subrecipient by project area, and as A-19s are submitted, program and accounting staff update budget spreadsheets. When reviewing the support provided by the subrecipient, they ensure amounts submitted by project are reasonable and are in alignment with expectations for the budget period submitted. • The Immunization program refer to the federal Immunization Program Operations Manual (IPOM) to determine allowable costs, purchase, and procurement procedures. •The Fiscal Monitoring Unit provides technical assistance and training, not only to program staff, but to the subrecipients while onsite and at the request of the entities receiving funding. • The Immunizations program provides technical assistance, policies, and training to Immunization subrecipients related to both allowability and compliance. • The Immunizations program has continued to strengthen processes to ensure that the backup documentation received is in alignment with the agency’s documentation matrix for sub-recipients per their risk level. Auditor’s Remarks While management has implemented a new procedure for program staff to document their review and approval of subrecipient reimbursement requests, this approval is not communicated to fiscal staff before payments are issued. As a result, approval is assumed and not verified by fiscal staff when no response is received from the program staff. The amount of supporting documentation submitted by a subrecipient utilizing consolidated contracts is extensive and often covers multiple reimbursement requests for more than one federally funded program. In our judgment, this increases the risk that a proper review is not performed before payments are issued. The Department did not concur with some of the identified exceptions and stated it believed it was due to our Office’s lack of understanding of their processes. This assertion is not accurate. We understand their processes, but four of the exceptions were payments for services that occurred prior to the grant being open (expenses were for the month of June 2022, but the award opened July 1, 2022. These four exceptions included the “allocation of space costs and how overtime is earned and accounted for” referred to in the Department’s response. These exceptions were discussed in detail with the Department and during these discussions the Department mistakenly asserted that the time of payment was what determined compliance, not when the activity occurred. This is not correct and may be part of why the Department did not concur with the exceptions. We reaffirm our finding and will follow up on the status of the Department’s corrective action during our next audit period. Applicable Laws and Regulations 45 U.S. Code of Federal Regulations (CFR) Part 75, section 2, Definitions, includes the definition of improper payment. Title 45 CFR Part 75, section 303, Internal Controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 45 CFR Part 75, section 403, Factors Affecting Allowability of Costs. 45 CFR Part 75, section 410, Collection of Unallowable Costs Title 45 CFR Part 75, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Washington State Department of Health A-19 Documentation Matrix Approved by FMU 7/1/22 This is the backup documentation required based on the determined risk level. More supporting documentation may be requested by programs at any time regardless of risk category. Please review your statement of work to determine if there are additional documentation requirements. NOTE: Indirect costs included on A19s must include verification of the following: • Indirect plan is current and on file with DOH • Indirect rate is being applied accurately to allowable expenditures • If the indirect cost rate plan has expired, no indirect costs can be charged If the subrecipient is using 10% de minimis they must complete DOH de minimis certification
2023-046 The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Assistance Listing Number and Title: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: NU50CK000515-05-00; NU50CK000515-01-06; NU50CK000515-01-07; NU50CK000515-01-08; NU50CK000515-02-04; NU50CK000515-01-09; NU50CK000515-02-01; NU50CK000515-02-06; NU50CK000515-02-03; NU50CK000515-02-09; NU50CK000515-02-07; NU50CK000515-03-03; NU50CK000515-03-01; NU50CK000515-04-00; NU50CK000515-04-03 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs / Cost Principles Period of Performance Known Questioned Cost Amount: $1,735 Prior Year Audit Finding: Yes, Finding 2022-033 Background The Department of Health administers the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. The goal of the program is to support state, local, and territories’ public health efforts to reduce morbidity and associated deaths caused by a wide range of infectious disease threats. ELC provides annual funding, strategic direction, and technical assistance to domestic jurisdictions for strengthening core capacities in epidemiology, laboratory, and health information systems activities. In addition to strengthening core infectious disease capacities nationwide, the program also supports several specific infectious disease programs and projects, and provides special appropriations in response to infectious disease emergencies. The Department spent about $198.5 million in federal grant funds in fiscal year 2023, about $17 million of which was disbursed to subrecipients. To help carry out the program’s objectives, the Department issues consolidated contracts to Local Health Jurisdictions that are classified as subrecipients. A consolidated contract is for one subrecipient that combines funding for multiple federal programs. Subrecipients are awarded federal funds on a reimbursement basis only. The Department assigns each subrecipient a risk level based on standardized criteria, and it maintains a matrix that specifies the documentation that subrecipients at each risk level are required to submit with every reimbursement. There are varying requirements among low, moderate and high-risk subrecipients for each of the following expense categories: • Salaries and benefits • Equipment ($5,000 or more) • Materials, supplies, and other • Travel (in-state and out-of-state) • Contracts and sub-subrecipients • Administrative/indirect costs During the audit period, subrecipients submitted invoices to the Department’s accounting unit where staff, on a weekly basis, compiled a list of all consolidated contract invoices into one email. The emails were sent to Department program staff requesting review to ensure the payment was allowable. The emails consisted of 30 to 50 invoice requests with hundreds of pages of supporting documentation. Each invoice listed in the email would be considered approved if program staff did not respond. To address concerns about an invoice, program staff were required to email the accounting unit within 10 business days to withhold payment until the items in question were resolved. Beginning in February 2023, program staff documented their review and approval of the reimbursement request on a spreadsheet. The spreadsheet was only used at the program level, so it was not shared with the fiscal staff to communicate approval prior to issuing payment. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Department did not have adequate internal controls over and did not comply with fiscal monitoring requirements to ensure subrecipients of the ELC program only used funds for allowable activities and met cost principles. The prior finding number was 2022-033. Description of Condition The Department did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the ELC program. Department program staff were required to use the documentation matrix when reviewing subrecipient payments to ensure they were for allowable activities, met cost principles, were within the period of performance and included required supporting documentation. However, program staff did not communicate their approval to the accounting unit that issues payment. As a result, the Department paid the subrecipients without knowing whether these expenditures had been reviewed and approved by the program staff. We used a statistically valid sampling method to randomly select and examine 55 out of 441 subrecipient payments. Additionally, we judgmentally reviewed one individually significant payment that totaled $939,182. In total, we examined more than $8.8 million in subrecipient payments as part of the audit. Of the 55 randomly selected payments examined, we identified two payments (3.6 percent) that did not have the required supporting documentation for the subrecipients’ assigned risk level. We consider these internal control deficiencies to be a material weakness. Cause of Condition The Department’s established procedures allowed for paying subrecipients without ensuring program staff reviewed and determined the payment was allowable and adequately supported. Furthermore, program management did not ensure staff followed the existing review procedures. Effect of Condition and Questioned Costs Without establishing adequate internal controls, the Department cannot reasonably ensure it is using federal funds for allowable purposes and within the period of performance. By not ensuring subrecipients submitted required supporting documentation, staff could not adequately verify the reimbursement claims, and the Department could not ensure its subrecipients complied with the subaward’s terms and conditions. The two payments for which the Department did not have required supporting documentation from subrecipients totaled $1,735 in known questioned costs. Based on these results, we estimate that the total amount of likely improper payments using federal funds to be $46,169. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our “best estimate of total questioned costs,” as required by 2 CFR 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: • Improve internal controls to ensure that it obtains adequate supporting documentation from subrecipients before reimbursing them • Improve internal controls to ensure program staff review and approve expenditures to verify they are for allowable activities prior to payment • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department’s Response We appreciate the State Auditor’s Office audit of the ELC grant. DOH is committed to ensuring our programs comply with federal regulations. The Department does not concur with the finding. While the Department has taken steps to ensure payments to providers contain proper support in line with our A19 matrix for risk assessed of our subrecipients, we continue to disagree with SAO’s assessment of a material weakness in internal controls over the consolidated contract provider payment process. As noted in the finding, program staff now document their review and approval of consolidated contract reimbursement requests. If the payment has no issues or concerns, the total payment is logged in a spreadsheet with documented review and approval to denote no issues and that full payment can be made. If there is a question on allowable cost, period of performance, a need for additional backup or an error, program ELC staff will update spreadsheet with the amounts in question and communicate with the Local Health Jurisdiction (LHJ), document the correspondence, and contact the accounting consolidated contract payment desk to withhold the specific amount of payment until the issue is resolved. Once resolved staff update the spreadsheet to denote the issue has been resolved and email accounting to release the payment amount in question. The defined process of consolidated contract payments has been in place for well over a decade and was implemented in response to issues arising with timely payment of funds to our local government partners. The consolidated contracts are an essential tool in providing such funding on a large scale. This process balances many needs in tracking payments, providing documentation to the programs for review as well as allowing for timely distribution of funding to the local health jurisdictions for state and federal programs in order to serve the residents of the State of Washington. It also simplifies the invoicing and payment process as well as reconciliation between DOH and the LHJs. Auditor’s Remarks While management has implemented a new procedure for program staff to document their review and approval of subrecipient reimbursement requests, this approval is not communicated to fiscal staff before payments are issued. As a result, approval is assumed and not verified by fiscal staff when no response is received from the program staff. The amount of supporting documentation submitted by a subrecipient utilizing consolidated contracts is extensive and often covers multiple reimbursement requests for more than one federally funded program. In our judgment, this increases the risk that a proper review is not performed before payments are issued. We reaffirm our finding and will follow up on the status of the Department’s corrective action during our next audit period. Applicable Laws and Regulations 45 U.S. Code of Federal Regulations (CFR) Part 75, section 2, Definitions, includes the definition of improper payment. Title 45 CFR Part 75, section 303, Internal Controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 45 CFR Part 75, section 403, Factors Affecting Allowability of Costs. 45 CFR Part 75, section 410, Collection of Unallowable Costs. Title 45 CFR Part 75, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Washington State Department of Health A-19 Documentation Matrix Approved by FMU 7/1/2022 This is the backup documentation required based on the determined risk level. Please ensure the detailed GL expenditure report clearly aligns with the A19 form. More supporting documentation may be requested by programs at any time due to programmatic requirements regardless of risk category. NOTE: Indirect costs included on A19s must include verification of the following: • Indirect plan is current and on file with DOH • Indirect rate is being applied accurately to allowable expenditures • If the indirect cost rate plan has expired, no indirect costs can be charged If the subrecipient is using 10% de minimis they must complete DOH de minimis certification
2023-046 The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Assistance Listing Number and Title: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: NU50CK000515-05-00; NU50CK000515-01-06; NU50CK000515-01-07; NU50CK000515-01-08; NU50CK000515-02-04; NU50CK000515-01-09; NU50CK000515-02-01; NU50CK000515-02-06; NU50CK000515-02-03; NU50CK000515-02-09; NU50CK000515-02-07; NU50CK000515-03-03; NU50CK000515-03-01; NU50CK000515-04-00; NU50CK000515-04-03 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Activities Allowed or Unallowed Allowable Costs / Cost Principles Period of Performance Known Questioned Cost Amount: $1,735 Prior Year Audit Finding: Yes, Finding 2022-033 Background The Department of Health administers the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. The goal of the program is to support state, local, and territories’ public health efforts to reduce morbidity and associated deaths caused by a wide range of infectious disease threats. ELC provides annual funding, strategic direction, and technical assistance to domestic jurisdictions for strengthening core capacities in epidemiology, laboratory, and health information systems activities. In addition to strengthening core infectious disease capacities nationwide, the program also supports several specific infectious disease programs and projects, and provides special appropriations in response to infectious disease emergencies. The Department spent about $198.5 million in federal grant funds in fiscal year 2023, about $17 million of which was disbursed to subrecipients. To help carry out the program’s objectives, the Department issues consolidated contracts to Local Health Jurisdictions that are classified as subrecipients. A consolidated contract is for one subrecipient that combines funding for multiple federal programs. Subrecipients are awarded federal funds on a reimbursement basis only. The Department assigns each subrecipient a risk level based on standardized criteria, and it maintains a matrix that specifies the documentation that subrecipients at each risk level are required to submit with every reimbursement. There are varying requirements among low, moderate and high-risk subrecipients for each of the following expense categories: • Salaries and benefits • Equipment ($5,000 or more) • Materials, supplies, and other • Travel (in-state and out-of-state) • Contracts and sub-subrecipients • Administrative/indirect costs During the audit period, subrecipients submitted invoices to the Department’s accounting unit where staff, on a weekly basis, compiled a list of all consolidated contract invoices into one email. The emails were sent to Department program staff requesting review to ensure the payment was allowable. The emails consisted of 30 to 50 invoice requests with hundreds of pages of supporting documentation. Each invoice listed in the email would be considered approved if program staff did not respond. To address concerns about an invoice, program staff were required to email the accounting unit within 10 business days to withhold payment until the items in question were resolved. Beginning in February 2023, program staff documented their review and approval of the reimbursement request on a spreadsheet. The spreadsheet was only used at the program level, so it was not shared with the fiscal staff to communicate approval prior to issuing payment. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Department did not have adequate internal controls over and did not comply with fiscal monitoring requirements to ensure subrecipients of the ELC program only used funds for allowable activities and met cost principles. The prior finding number was 2022-033. Description of Condition The Department did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the ELC program. Department program staff were required to use the documentation matrix when reviewing subrecipient payments to ensure they were for allowable activities, met cost principles, were within the period of performance and included required supporting documentation. However, program staff did not communicate their approval to the accounting unit that issues payment. As a result, the Department paid the subrecipients without knowing whether these expenditures had been reviewed and approved by the program staff. We used a statistically valid sampling method to randomly select and examine 55 out of 441 subrecipient payments. Additionally, we judgmentally reviewed one individually significant payment that totaled $939,182. In total, we examined more than $8.8 million in subrecipient payments as part of the audit. Of the 55 randomly selected payments examined, we identified two payments (3.6 percent) that did not have the required supporting documentation for the subrecipients’ assigned risk level. We consider these internal control deficiencies to be a material weakness. Cause of Condition The Department’s established procedures allowed for paying subrecipients without ensuring program staff reviewed and determined the payment was allowable and adequately supported. Furthermore, program management did not ensure staff followed the existing review procedures. Effect of Condition and Questioned Costs Without establishing adequate internal controls, the Department cannot reasonably ensure it is using federal funds for allowable purposes and within the period of performance. By not ensuring subrecipients submitted required supporting documentation, staff could not adequately verify the reimbursement claims, and the Department could not ensure its subrecipients complied with the subaward’s terms and conditions. The two payments for which the Department did not have required supporting documentation from subrecipients totaled $1,735 in known questioned costs. Based on these results, we estimate that the total amount of likely improper payments using federal funds to be $46,169. Our sampling methodology meets statistical sampling criteria under generally accepted auditing standards in AU-C 530.05. It is important to note that the sampling technique we used is intended to support our audit conclusions by determining if expenditures complied with program requirements in all material respects. Accordingly, we used an acceptance sampling formula designed to provide a high level of assurance, with a 95 percent confidence of whether exceptions exceeded our materiality threshold. Our audit report and finding reflect this conclusion. However, the likely improper payment projections are a point estimate and only represent our “best estimate of total questioned costs,” as required by 2 CFR 200.516(3). To ensure a representative sample, we stratified the population by dollar amount. We question costs when we find an agency has not complied with grant regulations or when it does not have adequate documentation to support its expenditures. Recommendations We recommend the Department: • Improve internal controls to ensure that it obtains adequate supporting documentation from subrecipients before reimbursing them • Improve internal controls to ensure program staff review and approve expenditures to verify they are for allowable activities prior to payment • Consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid Department’s Response We appreciate the State Auditor’s Office audit of the ELC grant. DOH is committed to ensuring our programs comply with federal regulations. The Department does not concur with the finding. While the Department has taken steps to ensure payments to providers contain proper support in line with our A19 matrix for risk assessed of our subrecipients, we continue to disagree with SAO’s assessment of a material weakness in internal controls over the consolidated contract provider payment process. As noted in the finding, program staff now document their review and approval of consolidated contract reimbursement requests. If the payment has no issues or concerns, the total payment is logged in a spreadsheet with documented review and approval to denote no issues and that full payment can be made. If there is a question on allowable cost, period of performance, a need for additional backup or an error, program ELC staff will update spreadsheet with the amounts in question and communicate with the Local Health Jurisdiction (LHJ), document the correspondence, and contact the accounting consolidated contract payment desk to withhold the specific amount of payment until the issue is resolved. Once resolved staff update the spreadsheet to denote the issue has been resolved and email accounting to release the payment amount in question. The defined process of consolidated contract payments has been in place for well over a decade and was implemented in response to issues arising with timely payment of funds to our local government partners. The consolidated contracts are an essential tool in providing such funding on a large scale. This process balances many needs in tracking payments, providing documentation to the programs for review as well as allowing for timely distribution of funding to the local health jurisdictions for state and federal programs in order to serve the residents of the State of Washington. It also simplifies the invoicing and payment process as well as reconciliation between DOH and the LHJs. Auditor’s Remarks While management has implemented a new procedure for program staff to document their review and approval of subrecipient reimbursement requests, this approval is not communicated to fiscal staff before payments are issued. As a result, approval is assumed and not verified by fiscal staff when no response is received from the program staff. The amount of supporting documentation submitted by a subrecipient utilizing consolidated contracts is extensive and often covers multiple reimbursement requests for more than one federally funded program. In our judgment, this increases the risk that a proper review is not performed before payments are issued. We reaffirm our finding and will follow up on the status of the Department’s corrective action during our next audit period. Applicable Laws and Regulations 45 U.S. Code of Federal Regulations (CFR) Part 75, section 2, Definitions, includes the definition of improper payment. Title 45 CFR Part 75, section 303, Internal Controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 45 CFR Part 75, section 403, Factors Affecting Allowability of Costs. 45 CFR Part 75, section 410, Collection of Unallowable Costs. Title 45 CFR Part 75, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Washington State Department of Health A-19 Documentation Matrix Approved by FMU 7/1/2022 This is the backup documentation required based on the determined risk level. Please ensure the detailed GL expenditure report clearly aligns with the A19 form. More supporting documentation may be requested by programs at any time due to programmatic requirements regardless of risk category. NOTE: Indirect costs included on A19s must include verification of the following: • Indirect plan is current and on file with DOH • Indirect rate is being applied accurately to allowable expenditures • If the indirect cost rate plan has expired, no indirect costs can be charged If the subrecipient is using 10% de minimis they must complete DOH de minimis certification
PRAIRIE-HILLS ELEMENTARY SCHOOL DISTRICT 144 07‐016‐1440‐02 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2023 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2023 - 003 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I Grants to Local Education Agencies 4. Project No.: 2023-4300-00, 2022-4300-00, 2023-4331-00, 2022-4331-00 5. AL No.: 84.010 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Per the Uniform Guidance (2 CFR Part 200), all costs charged to Federal awards must be adequately documented and supported by the accounting records. 9. Condition15 During the audit we noted that the District claimed expenditures in excess of amounts that could be supported by the accounting records by $52,112. 10. Questioned Costs16 We identified $52,112 in known questioned costs. 11. Context17 The District's expenditure claim for the 2900 Function/400 object claim had unsupported expenditures of $11,702, the 3000 Function/400 object claim had unsupported expenditures of $11,485 and the 3700 Function/400 object had unsupported expenditures of $28,926. 12. Effect The District is not in compliance with the Uniform Guidance and claimed expenditures that were unsupported and resulted in questioned costs of $52,212. 13. Cause The cause of the condition appears to be an oversight on the part of The District. Although the District has policies in place to review and approve expenditures and charge them to a designated source of funds code, this was not enforced throughout the fiscal year and documentation was not maintained that reconciled the expenditure claim to the District's internal accounting records. 14. Recommendation We recommend that The District implement a formal policy requiring all expenditures to be supported by adequate documentation as well as consistently utilizing the relevant souce of funds code. The District should also provide training to all relevant personnel about this policy. 15. Management's response18 The District agrees with the finding and intends to implement the recommended actions. 14 See footnote 11. 15 Include facts that support the deficiency identified on the audit finding (§200.516 (b)(3)). 16 Identify questioned costs as required by §200.516 (a)(3 - 4). 17 See footnote 12. 18 To the extent practical, indicate when management does not agree with the finding, questioned cost, or both.
PRAIRIE-HILLS ELEMENTARY SCHOOL DISTRICT 144 07‐016‐1440‐02 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2023 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2023 - 003 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I Grants to Local Education Agencies 4. Project No.: 2023-4300-00, 2022-4300-00, 2023-4331-00, 2022-4331-00 5. AL No.: 84.010 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Per the Uniform Guidance (2 CFR Part 200), all costs charged to Federal awards must be adequately documented and supported by the accounting records. 9. Condition15 During the audit we noted that the District claimed expenditures in excess of amounts that could be supported by the accounting records by $52,112. 10. Questioned Costs16 We identified $52,112 in known questioned costs. 11. Context17 The District's expenditure claim for the 2900 Function/400 object claim had unsupported expenditures of $11,702, the 3000 Function/400 object claim had unsupported expenditures of $11,485 and the 3700 Function/400 object had unsupported expenditures of $28,926. 12. Effect The District is not in compliance with the Uniform Guidance and claimed expenditures that were unsupported and resulted in questioned costs of $52,212. 13. Cause The cause of the condition appears to be an oversight on the part of The District. Although the District has policies in place to review and approve expenditures and charge them to a designated source of funds code, this was not enforced throughout the fiscal year and documentation was not maintained that reconciled the expenditure claim to the District's internal accounting records. 14. Recommendation We recommend that The District implement a formal policy requiring all expenditures to be supported by adequate documentation as well as consistently utilizing the relevant souce of funds code. The District should also provide training to all relevant personnel about this policy. 15. Management's response18 The District agrees with the finding and intends to implement the recommended actions. 14 See footnote 11. 15 Include facts that support the deficiency identified on the audit finding (§200.516 (b)(3)). 16 Identify questioned costs as required by §200.516 (a)(3 - 4). 17 See footnote 12. 18 To the extent practical, indicate when management does not agree with the finding, questioned cost, or both.
PRAIRIE-HILLS ELEMENTARY SCHOOL DISTRICT 144 07‐016‐1440‐02 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2023 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2023 - 002 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund 4. Project No.: 22-4998-ER, 22-4998-E3, 23-4998-D3, 22-4998-HL, 23-4998-JK 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Per the Uniform Guidance (2 CFR Part 200), all costs charged to Federal awards must be adequately documented and supported by the accounting records. 9. Condition15 During the audit we noted that the District claimed expenditures in excess of amounts that could be supported by the accounting records by $102,438. 10. Questioned Costs16 We identified $102,438 in known questioned costs in our audit. 11. Context17 The District's expenditure claim for the 2540 Function/400 object claim had unsupported expenditures of $1,189, the 2550 Function/300 object claim had unsupported expenditures of $101,249. 12. Effect The District is not in compliance with the Uniform Guidance and claimed expenditures that were unsupported and resulted in questioned costs of $101,249. 13. Cause The cause of the condition appears to be an oversight on the part of The District. Although the District has policies in place to review and approve expenditures and charge them to a designated source of funds code, this was not enforced throughout the fiscal year and documentation was not maintained that reconciled the expenditure claim to the District's internal accounting records. 14. Recommendation We recommend that The District implement a formal policy requiring all expenditures to be supported by adequate documentation as well as consistently utilizing the relevant souce of funds code. The District should also provide training to all relevant personnel about this policy. 15. Management's response18 The District agrees with the finding and intends to implement the recommended actions. 14 See footnote 11. 15 Include facts that support the deficiency identified on the audit finding (§200.516 (b)(3)). 16 Identify questioned costs as required by §200.516 (a)(3 - 4). 17 See footnote 12. 18 To the extent practical, indicate when management does not agree with the finding, questioned cost, or both.
PRAIRIE-HILLS ELEMENTARY SCHOOL DISTRICT 144 07‐016‐1440‐02 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2023 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2023 - 002 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund 4. Project No.: 22-4998-ER, 22-4998-E3, 23-4998-D3, 22-4998-HL, 23-4998-JK 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Per the Uniform Guidance (2 CFR Part 200), all costs charged to Federal awards must be adequately documented and supported by the accounting records. 9. Condition15 During the audit we noted that the District claimed expenditures in excess of amounts that could be supported by the accounting records by $102,438. 10. Questioned Costs16 We identified $102,438 in known questioned costs in our audit. 11. Context17 The District's expenditure claim for the 2540 Function/400 object claim had unsupported expenditures of $1,189, the 2550 Function/300 object claim had unsupported expenditures of $101,249. 12. Effect The District is not in compliance with the Uniform Guidance and claimed expenditures that were unsupported and resulted in questioned costs of $101,249. 13. Cause The cause of the condition appears to be an oversight on the part of The District. Although the District has policies in place to review and approve expenditures and charge them to a designated source of funds code, this was not enforced throughout the fiscal year and documentation was not maintained that reconciled the expenditure claim to the District's internal accounting records. 14. Recommendation We recommend that The District implement a formal policy requiring all expenditures to be supported by adequate documentation as well as consistently utilizing the relevant souce of funds code. The District should also provide training to all relevant personnel about this policy. 15. Management's response18 The District agrees with the finding and intends to implement the recommended actions. 14 See footnote 11. 15 Include facts that support the deficiency identified on the audit finding (§200.516 (b)(3)). 16 Identify questioned costs as required by §200.516 (a)(3 - 4). 17 See footnote 12. 18 To the extent practical, indicate when management does not agree with the finding, questioned cost, or both.
PRAIRIE-HILLS ELEMENTARY SCHOOL DISTRICT 144 07‐016‐1440‐02 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2023 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2023 - 002 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund 4. Project No.: 22-4998-ER, 22-4998-E3, 23-4998-D3, 22-4998-HL, 23-4998-JK 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Per the Uniform Guidance (2 CFR Part 200), all costs charged to Federal awards must be adequately documented and supported by the accounting records. 9. Condition15 During the audit we noted that the District claimed expenditures in excess of amounts that could be supported by the accounting records by $102,438. 10. Questioned Costs16 We identified $102,438 in known questioned costs in our audit. 11. Context17 The District's expenditure claim for the 2540 Function/400 object claim had unsupported expenditures of $1,189, the 2550 Function/300 object claim had unsupported expenditures of $101,249. 12. Effect The District is not in compliance with the Uniform Guidance and claimed expenditures that were unsupported and resulted in questioned costs of $101,249. 13. Cause The cause of the condition appears to be an oversight on the part of The District. Although the District has policies in place to review and approve expenditures and charge them to a designated source of funds code, this was not enforced throughout the fiscal year and documentation was not maintained that reconciled the expenditure claim to the District's internal accounting records. 14. Recommendation We recommend that The District implement a formal policy requiring all expenditures to be supported by adequate documentation as well as consistently utilizing the relevant souce of funds code. The District should also provide training to all relevant personnel about this policy. 15. Management's response18 The District agrees with the finding and intends to implement the recommended actions. 14 See footnote 11. 15 Include facts that support the deficiency identified on the audit finding (§200.516 (b)(3)). 16 Identify questioned costs as required by §200.516 (a)(3 - 4). 17 See footnote 12. 18 To the extent practical, indicate when management does not agree with the finding, questioned cost, or both.
Criteria: Per federal regulation 2 CFR section 200.516(b)(1), the School District is required to develop and maintain procedures regarding equipment acquired with federal funds. Condition: The School District has not adopted written procedures regarding the inventory and safeguarding of equipment purchased with federal funds. Cause: The School District was unaware of the detailed procedures required with respect to the accountability of federally funded equipment. Effect: The School District is not in compliance with the equipment requirements. Recommendation: We recommend that the School District adopt procedures to maintain property records on federally acquired equipment consistent with the required components identified in 2 CFR section 200.516; the safeguarding of such equipment; and perform an inventory of such equipment no less than once every two years. Management’s Response: Management agrees with this finding. Status: The School District has implemented policies and procedures regarding equipment acquired with federal funds, but has not prepared an existing inventory of equipment acquired with federal funds from past years. There were no purchases that would be applicable that were made during the fiscal year ended June 30, 2023.
Criteria: Per federal regulation 2 CFR section 200.516(b)(1), the School District is required to develop and maintain procedures regarding equipment acquired with federal funds. Condition: The School District has not adopted written procedures regarding the inventory and safeguarding of equipment purchased with federal funds. Cause: The School District was unaware of the detailed procedures required with respect to the accountability of federally funded equipment. Effect: The School District is not in compliance with the equipment requirements. Recommendation: We recommend that the School District adopt procedures to maintain property records on federally acquired equipment consistent with the required components identified in 2 CFR section 200.516; the safeguarding of such equipment; and perform an inventory of such equipment no less than once every two years. Management’s Response: Management agrees with this finding. Status: The School District has implemented policies and procedures regarding equipment acquired with federal funds, but has not prepared an existing inventory of equipment acquired with federal funds from past years. There were no purchases that would be applicable that were made during the fiscal year ended June 30, 2023.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
Federal Program Information: Highway Planning and Construction (ALN 20.205), Motor Carrier Safety Assistance High Priority Activities Grants and Cooperative Agreements (ALN 20.237), State and Community Highway Safety Grants (ALN 20.600) and Mineta Consortium for Transportation Mobility (“MCTM”) (ALN 20.701) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): § 200.516(4) and (6) requires the auditor to report the following as audit findings in a schedule of findings and questioned costs: a) Known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. Except for audit follow-up, the auditor is not required to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program that is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program that is not audited as a major program (for example, as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $25,000, the auditor must report this as an audit finding. b) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to report publicly information which could compromise investigative or legal proceedings or to make an additional reporting when the auditor confirms that the fraud was reported outside the auditor's reports under the direct reporting requirements of Generally Accepted Government Auditing Standards (“GAGAS”). B. Allowable Costs – In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: Certain expenditures reported on the schedule of expenditures and federal awards were not allowable under federal guidelines, and were not appropriately approved nor supported by sufficient documentation. Cause: Suspected misappropriation of assets arising from insufficient internal controls and administrative oversight with respect to review of federal expenditures for allowable costs. Effect or Potential Effect: These costs were inappropriately reimbursed with federal funds during the year. Questioned Costs: $141,060. Context: As discussed in Finding 2023-001, there was a failure with respect to the system of internal control that allowed for suspected misappropriation from specific individuals. The University performed an investigation that covered expenditures as presented on the schedule of expenditure of federal awards for the year ended June 30, 2023 that identified both the suspected abuse/misappropriation and the related questioned costs. Management’s investigation is ongoing and the appropriate law enforcement authorities have been notified. Additional questioned costs related to fiscal years prior to and subsequent to the year ended June 30, 2023 may be identified. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University revise its procedures and internal controls surrounding the review of expenditures charged to federal grants by defining the expectations of those that are approving the various aspects of expenditures, including clarifying expectations for reviewing supporting documentation. We also recommend that the University engage in additional training for those that are a part of the approval process for such expenditures, with the objective of renewing understanding of the procurement requirements under the Uniform Guidance as well as the expectations commensurate with their roles as approvers. Such changes will help the University ensure that expenditures are allowable based on the grant agreement and federal regulations. Views of Responsible Officials: The process to review Payment Request Forms (“PRFs”), used for payment to vendors that do not require the use of a purchase order, will be improved by requiring the review of supporting documents to ensure expenses are allowable by the newly established Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, and reasonable according to university policies and grant terms. PRFs will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. The Director of Compliance will conduct spot checks on all sponsored transactional activity involving PRFs, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO post-award office. The Director of Post Award Compliance will be hired by March 2025. As part of the compliance program, quarterly audit samples will be conducted of PRFs and other high risk sponsored research transactions.
2 CFR § 200.439(b)(1) states that capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. Further, 2 CFR § 200.439(b)(2) states that capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR § 200.439(b)(3) states, in part, that capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency, or pass-through entity. 2 CFR § 200.421(e)(3) states, in part, that unallowable advertising and public relations costs include the costs of promotional items and memorabilia, including models, gifts, and souvenirs. Additionally, the federal grant agreement states, in part, that all construction and other capital expenditures/improvements supported with federal funds must be pre-approved by the Ohio Department of Education through the CCIP Application Process. Construction means (A) the preparation of drawings and specifications for school facilities; (B) erecting, building, acquiring, altering, remodeling, repairing, or extending school facilities; and (C) inspecting and supervising the construction of school facilities. Capital expenditures means expenditures to acquire capital assets (i.e., land, facilities, or equipment over $5,000 per unit) or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. During our testing of the ESSER Federal grant monies, we sampled 60 non-payroll transactions totaling $923,224 and two individually important items totaling $372,000. We noted the following exceptions: • 18 out of 60 transactions totaling $344,620 and one out of two individually important items totally $198,000 were not allowable per the programmatic requirements listed above. These noncompliant expenditures resulted in a projected noncompliant amount of $1,168,544. • One of the above expenditures is unallowable per the Federal grant agreement and per CFR § 200.421(e)(3) which was for the purchase of new hire t-shirts in the amount of $288; and • Seventeen of the above expenditures and one individually important item were for the purchase of various capital expenditures (the Patterson Field project, scoreboard, gym floor resurfacing, electrical repairs, garage roof repairs, gymnasium sound system, boiler repairs, security cameras, riding floor scrubber, copiers, a tractor, classroom expansion project and an ice machine) which were unallowable per the Federal grant agreement and 2 CFR § 200.439(b)(1), 2 CFR § 200.439(b)(2), and 2 CFR § 200.439(b)(3). The unallowable activities/costs paid with these Federal grant monies is in excess of $25,000 and therefore considered questioned costs under 2 CFR § 200.516. District management should review all grant award documents in order to execute policies and procedures which help ensure compliance with grant requirements. The District should thoroughly review all grant documentation to ensure all expenditures spent using Federal funds are in compliance with requirements.
2 CFR § 200.439(b)(1) states that capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. Further, 2 CFR § 200.439(b)(2) states that capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR § 200.439(b)(3) states, in part, that capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency, or pass-through entity. 2 CFR § 200.421(e)(3) states, in part, that unallowable advertising and public relations costs include the costs of promotional items and memorabilia, including models, gifts, and souvenirs. Additionally, the federal grant agreement states, in part, that all construction and other capital expenditures/improvements supported with federal funds must be pre-approved by the Ohio Department of Education through the CCIP Application Process. Construction means (A) the preparation of drawings and specifications for school facilities; (B) erecting, building, acquiring, altering, remodeling, repairing, or extending school facilities; and (C) inspecting and supervising the construction of school facilities. Capital expenditures means expenditures to acquire capital assets (i.e., land, facilities, or equipment over $5,000 per unit) or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. During our testing of the ESSER Federal grant monies, we sampled 60 non-payroll transactions totaling $923,224 and two individually important items totaling $372,000. We noted the following exceptions: • 18 out of 60 transactions totaling $344,620 and one out of two individually important items totally $198,000 were not allowable per the programmatic requirements listed above. These noncompliant expenditures resulted in a projected noncompliant amount of $1,168,544. • One of the above expenditures is unallowable per the Federal grant agreement and per CFR § 200.421(e)(3) which was for the purchase of new hire t-shirts in the amount of $288; and • Seventeen of the above expenditures and one individually important item were for the purchase of various capital expenditures (the Patterson Field project, scoreboard, gym floor resurfacing, electrical repairs, garage roof repairs, gymnasium sound system, boiler repairs, security cameras, riding floor scrubber, copiers, a tractor, classroom expansion project and an ice machine) which were unallowable per the Federal grant agreement and 2 CFR § 200.439(b)(1), 2 CFR § 200.439(b)(2), and 2 CFR § 200.439(b)(3). The unallowable activities/costs paid with these Federal grant monies is in excess of $25,000 and therefore considered questioned costs under 2 CFR § 200.516. District management should review all grant award documents in order to execute policies and procedures which help ensure compliance with grant requirements. The District should thoroughly review all grant documentation to ensure all expenditures spent using Federal funds are in compliance with requirements.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
Criteria or specific requirement (including statutory, regulatory, or other citation) - During the fiscal years June 30, 2018 to June 30, 2023, the University incurred unallowed expenditures for a federal grant that were not identified by the internal controls in place over the grant program. According to 2 CFR § 200.413, Direct Costs, direct costs are those costs that can be directly assigned to a direct cost activity with a high degree of accuracy. In addition, according to 2 CFR § 200.516, Audit Findings, the auditor must report known fraud affecting a federal award as well as known questioned costs that are greater than $25,000 for a federal program which is not audited as a major program, as an audit finding. Condition- From fiscal year 2018 through 2023, the University was not able to support that expenses paid from a federal grant for salary, benefits, and travel and other expense reimbursements for an adjunct faculty member were related to allowable activities to eligible clients under the terms of the grant agreement due to false reporting by the adjunct faculty member. More specifically, the adjunct faculty member misrepresented that services were or would be provided per the terms of the grant to eligible clients. In addition, the adjunct faculty member provided false reporting of the impact of services provided to the clients and utilized fraudulent documentation as evidence for their work performed. As a result, the University was reimbursed for expenses by the grant related to services that were not provided or were unallowable. Cause - Lack of oversight and insufficient review of work performed of adjunct faculty member. Effect- The University was reimbursed federal grant monies for work that was not performed under the terms and conditions of the grant award. Questioned costs - For fiscal years 2018 to 2023, questioned costs totaled $209,101. Identification as a repeat finding - Not applicable – this matter is not a repeat finding Recommendation - We recommend the University, along with the internal audit function, continue to emphasize with staff existing job responsibilities, the critical task of secondary reviews and thoroughness of those reviews. The reviews should include ensuring compliance with grant terms and conditions, as well as adequate documentation is provided and maintained to support the federal expenditure and the secondary reviews.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Program Name: Foster Care, Adoption, and Guardianship Assistance Cluster AL# 93.658, 93.659 Grant Number: 2201NCFOST / 2301NCFOST; 2201NCADPT / 2301NCADPT Material Weakness Material Non-Compliance Finding 2023-001 Criteria: In order for costs to be allowable for purposes of reimbursement they must be allowable in accordance with 45 CFR section 1356.60 and the NC Division of Social Services Manual. All County Department of Social Services employees which provide direct services must maintain daysheets in accordance with the NC Department of Social Services Information System Policy. Condition: The County Department of Social Services failed to retain proper documentation regarding daysheet entries. Context: Of the 892 payroll charges valued at $1,287,503, we examined 55 daysheets ($44,716 value) and determined that nine daysheets (16% valued at $14,964 did not have documentation to substantiate time charged to the Foster Care, Adoption, and Guardianship Assistance Cluster program. Questioned Costs: In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $14,964 (federal share of $13,844 and state share $1,120) in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Effect: Caseworker time entry could be charged to the wrong program/grant causing administrative costs to be misallocated. Cause: Caseworker failed to retain documentation of time charged to program. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-002. Recommendation: Require the County Program Directors to implement procedures to ensure that daysheets are properly supported by documentation of time charged to each program. Name of Contact Person: Angela Karchmer, Social Services Director Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Program Name: Foster Care, Adoption, and Guardianship Assistance Cluster AL# 93.658, 93.659 Grant Number: 2201NCFOST / 2301NCFOST; 2201NCADPT / 2301NCADPT Material Weakness Material Non-Compliance Finding 2023-001 Criteria: In order for costs to be allowable for purposes of reimbursement they must be allowable in accordance with 45 CFR section 1356.60 and the NC Division of Social Services Manual. All County Department of Social Services employees which provide direct services must maintain daysheets in accordance with the NC Department of Social Services Information System Policy. Condition: The County Department of Social Services failed to retain proper documentation regarding daysheet entries. Context: Of the 892 payroll charges valued at $1,287,503, we examined 55 daysheets ($44,716 value) and determined that nine daysheets (16% valued at $14,964 did not have documentation to substantiate time charged to the Foster Care, Adoption, and Guardianship Assistance Cluster program. Questioned Costs: In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $14,964 (federal share of $13,844 and state share $1,120) in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Effect: Caseworker time entry could be charged to the wrong program/grant causing administrative costs to be misallocated. Cause: Caseworker failed to retain documentation of time charged to program. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-002. Recommendation: Require the County Program Directors to implement procedures to ensure that daysheets are properly supported by documentation of time charged to each program. Name of Contact Person: Angela Karchmer, Social Services Director Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Program Name: Foster Care, Adoption, and Guardianship Assistance Cluster AL# 93.658, 93.659 Grant Number: 2201NCFOST / 2301NCFOST; 2201NCADPT / 2301NCADPT Material Weakness Material Non-Compliance Finding 2023-001 Criteria: In order for costs to be allowable for purposes of reimbursement they must be allowable in accordance with 45 CFR section 1356.60 and the NC Division of Social Services Manual. All County Department of Social Services employees which provide direct services must maintain daysheets in accordance with the NC Department of Social Services Information System Policy. Condition: The County Department of Social Services failed to retain proper documentation regarding daysheet entries. Context: Of the 892 payroll charges valued at $1,287,503, we examined 55 daysheets ($44,716 value) and determined that nine daysheets (16% valued at $14,964 did not have documentation to substantiate time charged to the Foster Care, Adoption, and Guardianship Assistance Cluster program. Questioned Costs: In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $14,964 (federal share of $13,844 and state share $1,120) in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Effect: Caseworker time entry could be charged to the wrong program/grant causing administrative costs to be misallocated. Cause: Caseworker failed to retain documentation of time charged to program. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-002. Recommendation: Require the County Program Directors to implement procedures to ensure that daysheets are properly supported by documentation of time charged to each program. Name of Contact Person: Angela Karchmer, Social Services Director Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
U.S. Department of Health and Human Services Passed through the N.C. Dept. of Health and Human Services Grant Number: 2201NCADPT / 2301NCADPT Program Name: Child Support Enforcement AL# 93.563 Grant Number: 2201NCCES / 2301NCCES Significant Deficiency Non-Material Non-Compliance Finding 2023-004 Criteria: In accordance with 45 CFR 304 and the Division of Social Services Fiscal Manual, management should have an adequate system of internal control procedures in place to ensure that salaries are being paid at the approved rate in accordance with the county pay plan. Condition: The County Department of Social Services failed to pay one employee at the correct pay rate. Context: Of the 289 payroll charges valued at $1,294,572, we examined 40 payroll charges ($184,290 value) and determined that one employee (2.5% valued at $415) was not paid at the approved pay rate. Questioned Costs: In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Costs are under the amount to be reported. Effect: Caseworker time could be charged at the incorrect pay rate causing administrative costs to be inaccurately reported to the state for reimbursement. Cause: The County failed to pay one employee at the correct pay rate. Recommendation: Require the Human Resources Department and County Program Directors to implement procedures to ensure that pay rates are properly entered into the payroll processing system at the time the pay rate is established. Name of Contact Person: Amia Massey, Director, Human Resources Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding and will adhere to the Corrective Action Plan in this audit report.
2023-006 Federal Awarding Agency: Department of the Treasury Program title and ALN: Coronavirus State and Local Fiscal Recovery Funds #21.027 126 GRANT COUNTY, OREGON SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2023 Compliance requirements applicable to finding: Activities Allowed or Unallowed Findings: Other findings disclosed in accordance with 2 CFR 200.516(a) Questioned Costs: $90,122 in known questioned costs related to the non-major federal program Criteria: The county spent $90,122 in Coronavirus State and Local Fiscal Recovery Funds on the remodel of a county building planned to materially be used for the new offices of the county’s emergency management department. Coronavirus State and Local Fiscal Recovery Funds under ALN #21.027 are required to be spent on projects that directly respond to the public health and negative economic impacts of the COVID-19 pandemic. Under 602(c)(1)(A) or 603(c)(1)(A), a general infrastructure project typically would not be considered a response to the public health emergency and its negative economic impacts unless the project responds to a specific pandemic-related public health need (e.g., investments in facilities for the delivery of vaccines) or a specific negative economic impact of the pandemic (e.g., affordable housing in a Qualified Census Tract). The emergency management department does not fit these criteria, which means this remodel project is an unallowed cost. Condition and Context: As a result of following up on prior year findings reported on the Schedule of Findings and Questioned Costs for the year ended June 30, 2022, significant transactions were identified that directly relate to noncompliance over the federal program that occurred during the June 30, 2023, fiscal year. These transactions were not tested as a major program during the 2023 fiscal year and were not subject to current year auditing procedures; however, noncompliance and known questioned costs were identified that met requirements for disclosure. Furthermore, recommendations made by auditors and plans of corrective action identified by management in prior years were insufficiently addressed. Cause: Unfamiliarity with program requirements from those accumulating and tracking costs charged to the program and lack of knowledgeable oversight over the program was a significant cause for these findings. The county lacked internal controls to ensure expenditures reimbursed through the program met compliance requirements. Effect: Known questioned costs related to the compliance of federal programs in the amount of $90,122 related to expenditures in the 2023 fiscal year were identified. Recommendation: We recommend the county adopt formal policies to address transactional compliance over grant awards. Given the volume of grant activity, identifying a grant compliance officer with the requisite experience in program compliance monitoring should be an included control. The current general ledger system has historically been sufficient to address the appropriate segregation and tracking of individual awards but has been used inappropriately to be implemented as a control. Monitoring of controls over expenditures and grant award compliance should be implemented, and deviations from controls in place should be addressed timely. Views of responsible officials and planned corrective actions: The County does not have available funding to hire a grant compliance officer, however, the County plans to seek training resources for current staff responsible for grant administration.
Agency: Department of Treasury Program & ALN: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (21.027) ComplianceRequirement: Reporting Finding Type: Finding reported in accordance with 2 CFR section 200.516(a) Criteria: Per grant requirements, recipients are required to submit annual Project and Expenditure Reports detailing cumulative and current period expenditures andobligations. Condition: The Town filed reports with expenditures based on estimates that did not have underlying supporting documentation. Cause: The Town did not have a proper reporting and review process of federal grants. Effect: The expenditures reported by the Town on the report for the year ended March 31, 2023 were overstated. Context: The Town reported expenditures totaling $4,988,468 for the two years ended March 31, 2023 but only had supporting expenditures totaling $4,208,385. Recommendation: Management should establish a reconciliation process and reports should be reviewed by someone other than the preparer prior to submission to ensure accuracy of reporting. Views of Responsible Officials and Planned Corrective Action: The Town concurs with the finding; however, it will be corrected as the Town willhave fully spent the funds by the next filing due March 31, 2024.
C. FINDINGS AND QUESTIONED COSTS - FOR MAJOR FEDERAL AWARD PROGRAMS AS DEFINED BY THE UNIFORM GUIDANCE (2 CFR 200.516(a)) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINDING NO. 2023-002: Late REAC Submission - See the details of this finding in 2023-001 above.
SECTION II - FINANCIAL STATEMENT FINDINGS This section identifies the significant deficiencies, material weaknesses, fraud, noncompliance with provisions of laws, regulations, contracts, grant agreements and abuse related to the financial statements for which Government Auditing Standards require reporting. There were no such findings in the current year that are required to be reported in accordance with Government Auditing Standards. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS This section identifies the audit findings required to be reported by 2 CFR 200.516(a) (significant deficiencies, material weaknesses, material instances of noncompliance, including questioned costs and material abuse). Finding 2023-001: Student Financial Assistance Cluster, Department of Education Programs Program Names: Federal Direct Student Loans AL Numbers: 84.268 Criteria or Specific Requirement: 34 CFR 685.309 and 34 CFR 690.83(b)(2) require the institution to update its Enrollment Reporting roster file at a minimum of every 60 days. Once a change in enrollment status has been received, the institution must update its roster file for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the National Student Loan Data System (NSLDS) website. Condition: The University did not report enrollment status updates for graduate students to the NSLDS through the National Student Clearinghouse as required under 34 CFR 682.610 for 16 of 40 students tested, within the 60-day required time frame. Cause: The exceptions noted were a result of a failure in the University’s processes and controls surrounding the validation of support uploaded to the National Student Clearinghouse. A manual trigger to an automated process was not initiated, resulting in a report not capturing enrollment changes in a timely manner for students who graduated from the University after the end of the Spring 2023 semester. Effect or Potential Effect: A student’s enrollment status determines eligibility for in-school status, deferment, and grace periods. Enrollment reporting in a timely and accurate manner is critical for effective management of the program. Changes in enrollment status were not submitted to the NSLDS within the time frame required under 34 CFR 682.610. Questioned Costs: None noted Context: The sample selected for testing is representative of the population. However, it was determined upon further review of the entire population by the University that there were 354 instances of noncompliance that were not included within the sample. Identification as a Repeat Finding, if applicable: This is not a repeat finding. Recommendation: We recommend that the University implement an additional step in its enrollment status change process to ensure that graduate status changes are reported in a timely manner and that the population of enrollment changes is complete. We also recommend that the University continue to develop and document additional policies and procedures to ensure that all enrollment changes are reported accurately, completely, and in a timely manner. Views of responsible officials: Management concurs with this finding. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
This section identifies the audit findings required to be reported by 2 CFR 200.516(a), including significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs and material abuse involving federal awards that are material to a major federal program. Finding No. 2023-01: Name of Federal Agency: Department of Health and Human Services Name of Pass Through Entity: Westmoreland County Children, Youth and Family Program Name: Temporary Assistance for Needy Families Assistance Listing No: 93.558 Condition During 2023, the Organization was notified upon completion of a Fiscal and Program File Review performed by an awarding agency, related to one of their Family Support Services programs, that errors were identified and supporting documentation was not readily available. As a result, the awarding agency determined these to be errors in billing and represented an overpayment. Criteria The Organization did not comply with the contractual arrangements and was non-compliant with a number of provisions of the Fiscal Year 2022-2023 Agreement with an awarding agency concerning financial responsibility and maintaining complete and accurate records related to one of their Family Support Services programs. Cause Upon initial review, there was insufficient understanding and training on the awarding agency’s documentation requirements. Effect The Organization is believed to have received an overpayment in the amount of approximately $586,594 due to lack of sufficient support for amounts billed and paid when compared to the awarding agency verified amount. Questioned Costs Approximately $586,594 of costs to be reimbursed to the awarding agency. Recommendation Management should improve processes surrounding submission of monthly invoices to include all required documentation to sufficiently support all items included within the invoice. Additional training should occur to ensure all individuals involved are aware of the requirement specified by the awarding agency. Reporting Views of Responsible Officials Management concurs with this finding and recommendation. See separate corrective action plan document.
Finding Number: 2023-005 State/Educational Agency(s): Arkansas Department of Commerce – Division of Workforce Services Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 17.225 – Unemployment Insurance Federal Awarding Agency: U.S. Department of Labor Federal Award Number(s): Not Applicable Federal Award Year(s): Not Applicable Compliance Requirement(s) Affected: Activities Allowed or Unallowed; Eligibility Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: A similar issue was reported in prior-year finding 2022-001. Criteria: In accordance with 2 CFR § 200.303, a 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 award. In addition, 2 CFR § 200.516 (a)(6) requires the auditor to report as an audit finding any known or likely fraud affecting a federal award. Condition and Context: In state fiscal year 2023, the Division of Workforce Services (DWS) identified 1,077 claims paid for Unemployment Insurance programs, totaling $2,295,059, as likely fraud. (This is in addition to the claims identified in the previous years.) The $2,295,059 is comprised of $1,563,505 in federal funds and $731,554 in state funds. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $1,563,505 (federal) $ 731,554 (state) Cause: In response to the increase in demand for services/benefits, the State relaxed controls over identify verification and income verification for the program during fiscal year 2021. DWS continued to identify claims in fiscal year 2023 that were paid during fiscal year 2021. Effect: Lack of appropriate internal controls resulted in overpayments of state and federal funds. Recommendation: ALA staff recommend the Agency continue to strengthen controls over benefit payments to ensure that payments are made in the correct amount and to eligible claimants. Additionally, ALA staff recommend the Agency continue to seek recoupment of the identified overpayments, returning them to their appropriate source. Views of Responsible Officials and Planned Corrective Action: Due to the health concerns of the pandemic as well as unprecedented claims volume, claimants were not required to come into a local office for identity verification, the waiting week was waived for 2020, and the requirements for work search were adjusted in order to protect employees and claimants. Before the pandemic, all claimants were required to come to the local office to verify their identity. Removing these process controls resulted in several consequences as itemized below: • By waiving the waiting week, the claimant was able to receive payment the following week. For example, a fraudster could file a claim on Friday, then receive payment on Sunday, removing the typical week that an employer would respond to validate the separation from employment. • The information mailed to the employer and claimant were not received before payments were made due to the lack of waiting week. • Businesses were closed at that time and did not respond to the unemployment paperwork timely to report fraudulent claims. • Identity theft fraudsters often changed the address of the individuals for which they had filed claims in order to prevent the victims from being notified and reporting the fraud. In 2020, the work search requirement was reinstated. In 2021, all claimants had to verify their identity in-person at the local office before the claim was opened for a regular unemployment claim. The UIdentify program was utilized for identity verification for the PUA claims filed after January 1, 2021. The waiting week was reinstated in January 2021, which lengthened the time period for employers to respond before payment was issued. In addition, Internal Audit created the Fraud Investigation Unit and hired additional staff to focus on investigating the identity theft fraud claims. When the perpetrator is identified, a determination is issued and an overpayment is established in the perpetrator’s name/SSN for collection. The NASWA Integrity Data Hub (IDH) crossmatch was implemented in July 2020 as well in an effort to identify additional fraudulent claims for investigation. ADWS was the first UI program to implement 2 projects with the Department of Labor for identity verification. One is using Login.gov and the other involves the United States Postal Service where they verify the identity of claimants for using multifactor authentication and in person presentation of ID. The Login.gov pilot started in 2022 and the USPS pilot project started in 2023. 1. The Login.gov project uses the current system that Federal agencies use to verify identity and went into service in Arkansas as of March 2022. A link is given to the claimant, when they select verify ID through login.gov and go through the steps to verify their identity through the federal government system. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. 2. The United States Postal Service project, implements in Arkansas March 2023, offers the claimant the same link as Login.gov, but grants the additional option to verify their identity at any US Post Office in the country. A barcode is created and must be taken with a valid government-issued ID (they are given examples) along with proof of current address to the post office in person. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. Anticipated Completion Date: Corrective action was taken for the controls the ALA staff recommended. Contact Person: Sheri Rooney Program Administrator Arkansas Division of Workforce Services #2 Capitol Mall Little Rock, AR 72201 501-682-3382 Sheri.Rooney@arkansas.gov
Finding Number: 2023-032 State/Educational Agency(s): Arkansas Department of Commerce – Division of Workforce Services Pass-Through Entity: Not Applicable ALN Number(s) and Program Title(s): 97.050 – COVID 19: Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (Supplemental Payments for Lost Wages) Federal Awarding Agency: Federal Emergency Management Agency Federal Award Number(s): 4518DRARSPLW Federal Award Year(s): Not Applicable Compliance Requirement(s) Affected: Activities Allowed or Unallowed; Eligibility Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: Not applicable Criteria: In accordance with 2 CFR § 200.303, a 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 award. In addition, 2 CFR § 200.516(a)(6) requires the auditor to report known or likely fraud affecting a federal award. Condition and Context: In state fiscal year 2023, the Division of Workforce Services (DWS) identified 64 claims paid for Lost Wages Assistance (LWA) totaling $67,500 as likely fraud. This is in addition to the claims identified in the previous fiscal years. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $67,500 Cause: In response to the increase in demand for services/benefits, the State relaxed controls over identify verification and income verification for the program during fiscal year 2021. DWS continued to identify claims in fiscal year 2023 that were paid during fiscal year 2021. Effect: Lack of appropriate internal controls resulted in overpayments of federal funds. Recommendation: ALA staff recommend the Agency continue to strengthen controls over benefit payments to ensure that payments are made in the correct amounts and to eligible claimants. Additionally, ALA staff recommend the Agency continue to seek recoupment of the identified overpayments, returning them to the appropriate source. Views of Responsible Officials and Planned Corrective Action: Due to the health concerns of the pandemic as well as unprecedented claims volume, claimants were not required to come into a local office for identity verification, the waiting week was waived for 2020, and the requirements for work search were adjusted in order to protect employees and claimants. Before the pandemic, all claimants were required to come to the local office to verify their identity. Removing these process controls resulted in several consequences as itemized below: • By waiving the waiting week, the claimant was able to receive payment the following week. For example, a fraudster could file a claim on Friday, then receive payment on Sunday, removing the typical week that an employer would respond to validate the separation from employment. • The information mailed to the employer and claimant were not received before payments were made due to the lack of waiting week. • Businesses were closed at that time and did not respond to the unemployment paperwork timely to report fraudulent claims. • Identity theft fraudsters often changed the address of the individuals for which they had filed claims in order to prevent the victims from being notified and reporting the fraud. In 2020, the work search requirement was reinstated. In 2021, all claimants had to verify their identity in-person at the local office before the claim was opened for a regular unemployment claim. The UIdentify program was utilized for identity verification for the PUA claims filed after January 1, 2021. The waiting week was reinstated in January 2021, which lengthened the time period for employers to respond before payment was issued. In addition, Internal Audit created the Fraud Investigation Unit and hired additional staff to focus on investigating the identity theft fraud claims. When the perpetrator is identified, a determination is issued and an overpayment is established in the perpetrator’s name/SSN for collection. The NASWA Integrity Data Hub (IDH) crossmatch was implemented in July 2020 as well in an effort to identify additional fraudulent claims for investigation. ADWS was the first UI program to implement 2 projects with the Department of Labor for identity verification. One is using Login.gov and the other involves the United States Postal Service where they verify the identity of claimants for using multifactor authentication and in person presentation of ID. The Login.gov pilot started in 2022 and the USPS pilot project started in 2023. 1. The Login.gov project uses the current system that Federal agencies use to verify identity and went into service in Arkansas as of March 2022. A link is given to the claimant, when they select verify ID through login.gov and go through the steps to verify their identity through the federal government system. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. 2. The United States Postal Service project, implements in Arkansas March 2023, offers the claimant the same link as Login.gov, but grants the additional option to verify their identity at any US Post Office in the country. A barcode is created and must be taken with a valid government-issued ID (they are given examples) along with proof of current address to the post office in person. If they are approved, we are sent an IA2 verification to the UI processing system to allow staff to match back to the claim to prove ID verification. Anticipated Completion Date: Corrective action was taken for the ALA staff recommendations Contact Person: Sheri Rooney Program Administrator Arkansas Division of Workforce Services #2 Capitol Mall Little Rock, AR 72201 501-682-3382 Sheri.Rooney@arkansas.gov
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Finding 2023-003 – Material Weakness AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to four separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed route operating expenses that should have been reimbursed by a local match as required by other FTA grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the program. Questioned Costs: $1,073,260. Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed route operating expenses that should have been reimbursed by a local match as the wrong federal percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the program. Questioned Costs: $33,129. Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program. Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part 200, Subpart F (Uniform Guidance), Section 200.516. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause: Several federal grants applied to these routes had local match requirements that were not captured by the District’s review procedures due to recent staff turnover and lack of documented procedures to track expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses charged to programs to make sure the total expenses allocated agree to the total population of expenses allocated. Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied, resulting in the overclaimed amounts cited above. Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different grants. There were potentially additional operating expenses under Paratransit services that could have offset some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a budget revision to allow for capital funding under the two related awards and is currently pending FTA approval. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants and to track the different funding sources applied. A summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.