Finding Text
Allowable Costs Questioned Costs: $22,000
Department of the Treasury
21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR)
Grant No(s): N/A
Criteria: Cost charged to federal grant programs, including the Coronavirus State and Local Fiscal Recovery Program, must be allowable according to the Program’s rules and subjected to an adequate system of internal control.
Condition: The City-Parish disbursed funds to a non-profit organization administered by City-Parish staff to cover costs of community violence intervention activities. Approximately $22,000 of costs reimbursed to the non-profit were duplicated charges also paid by another City-parish grant to the non-profit. This payment and others were not subjected to an adequate system of internal control, as the payment process lacked appropriate segregation of duties, a vital component of internal control.
Universe/
Population: Of a sampling of 40 separate cash disbursements selected from the program’s costs, 1 was made to the non-profit organization in the amount of $366,635 which included the underlying duplicate payments of $22,000. Total payments to the non-profit from the City-Parish were $1,018,115.
Effect: The City-Parish has an overpayment to the non-profit organization that needs to be recouped. Additionally, without appropriate segregation of duties, funds are at higher risk for additional errors or even misuse.
Cause: Improper design of internal controls.
Recommendation: Individuals involved with administering the non-profit organization should not approve disbursement of funds on-behalf of the City-Parish.
View of Responsible Official:
After reviewing the condition, cause, and effect of the presented Finding, the City-Parish finds it important to clarify that the duplicative charges were initially identified and documented as a self-reported finding. This discrepancy was discovered during the subrecipient monitoring component of this award and was promptly reported and reconciled prior to being presented as an audit finding. Upon identification of the duplicative charges, totaling approximately $22,000, immediate corrective action was taken to address the non-compliance. Dated January 5, 2024, a memorandum was filed disclosing the duplicative reimbursements, documenting the actions taken to rectify these charges, and recommending further steps to enhance the internal controls of the non-profit organization.
The following information summarizes the East Baton Rouge City-Parish American Rescue Plan Act (ARPA): Duplication of Benefits - Findings and Corrective Action Memorandum:
This memorandum documents the incidental reimbursement of multiple duplicative items associated with the subrecipient’s grant agreement and the corrective actions undertaken to resolve these findings, ensuring compliance with the terms of this award. During the routine subrecipient monitoring reviews, it was discovered that duplicate reimbursements occurred for 12 items between separate federal awards (American Rescue Plan Act SLFRF and CARES Act).
In accordance with 2 CFR 200.522(c), a corrective action plan was provided to resolve the non-compliance. To address this, the following actions were taken:
1) Reconciliation of Duplicate Reimbursements: The non-profit entity has since reconciled the total value of $22,222.98 in duplicate reimbursements with an equivalent value of eligible expenses, including all necessary backup documentation to satisfy existing procurement and reimbursement requirements.
2) Development of a Duplication of Benefits Policy: It was recommended that the non-profit entity develop a comprehensive duplication of benefits policy to strengthen their internal controls further. These additional safeguards are considered best practices and are intended to minimize the risk of future non-compliance. Additionally, a comprehensive, grant specific, financial management policy template was provided to support the non-profits action to adopt and implement an appropriate standard of internal controls.
The City-Parish is committed to maintaining robust internal controls and ensuring compliance with federal regulations. Immediate corrective measures were proactively taken to address these duplicative charges. Additionally, the City-Parish's third-party grants manager has established recurring weekly monitoring meetings with the non-profit entity to support the development and implementation of an adequate system of internal controls. Continuous efforts are being made to improve these processes to prevent such issues in the future.