Finding Text
Assistance Listing Number, Federal Agency, and Program Name - 93.323, U.S. Department of Health and Human Services, COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)
Federal Award Identification Number and Year - 2024
Pass through Entity - Wayne County Regional Educational Service Agency
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per 2 CFR 200.300(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Per 2 CFR 200.403(g), costs must be adequately documented.
Condition - The School District's controls did not prevent, or detect and correct in a timely manner, costs charged to the grant in excess of the related invoices.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A - Refer to context below.
Context - In a sample of 13 non payroll related transactions, we identified 3 transactions where the costs charged to the grant exceeded the related invoices. The School District used a manual allocation process through a manual journal entry to charge expenses to the grant that resulted in the grant being charged $48,447 in excess of the supporting invoices.
As of June 30, 2024, the School District had not yet requested reimbursement for the excess costs charged; the request was made and payment was received subsequent to year end.
Upon identification of the error, the School District posted a manual journal entry to remove the duplicate costs of $48,447 from the grant fund and reduced the SEFA by this amount for the year ended June 30, 2024. The School District followed the guidance of the pass through entity provided subsequent to year end.
Cause and Effect - Controls in place did not prevent, or detect and correct in a timely manner, an instance of noncompliance. The controls in place to verify that the manual adjusting journal entry was complete and accurate were not effective. As a result, the initial SEFA provided to the auditors was overstated by $48,447. The SEFA for the year ended June 30, 2024 was corrected.
Recommendation - We recommend that the School District review its processes and controls to ensure the preparation and review of journal entries to charge costs to grant funds include a review for duplicate expenses.
Views of Responsible Officials and Corrective Action Plan - The Grant Accounting team will develop a standard operating procedure on review and approval of journal entries. The Grant Account Team will provide training to Grant Compliance staff members on the defined process. Grant Compliance Senior Director and Assistant Director will be responsible for ensuring journal requests are submitted following the outlined operating procedure.
Grant Accounting staff members will review submitted materials to ensure no invoice is overcharged and then process journal request.