Federal Agencies: Department of Housing and Urban Development and Department of Health and Human Services Federal Assistance Listing Numbers: 14.231, 14.267, 93.224 & 93.527 Program: Emergency Solutions Grant Program, Continuum of Care Program, Health Center Program Cluster, COVID-19 Health Center Program Cluster Award/Pass-Through Entity Identifying Numbers: HH-21-03.4, CA0802L9D012214, CA0802L9D012315, CA1348L9D012208, CA1348L9D012309, CA1510L9D012207, CA1510L9D012308, CA1883L9D012203, CA1883L9D012304, HHI-24-09, SIHI-25-07, HHI-24-04, SIHI-25-18, H80CS10606-16-00, H80CS10606-17-04, H80CS10606-17-05, H8GCS48224, H8L50900-01-00, H8NCS53911-01-04 Criteria: The Uniform Guidance in Subpart E 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Further, matching funds must also be allowable under Subpart E – Cost Principles. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the recipient or subrecipient; and (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (vii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient’s or subrecipient’s written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: We noted that the Village allocated payroll expenditures to Emergency Solutions Grants Program, Continuum of Care Program, and Health Center Cluster during 2024 that lacked adequate or timely documentation. During our testing we noted instances where supervisor did not approve timesheets, instances where the incorrect allocation rate was utilized, and instances where attestations were not completed timely to support employee’s time allocated to the grant for reimbursement. • For Emergency Solutions Grants Program: o 41 out of 60 selections did not have timely completion of attestations • For Continuum of Care Program: o 2 out of 100 selections utilized the incorrect allocation rate to the grant. • For Continuum of Care Program in our testing of Matching Costs: o 2 out of 60 selections did not have approved timesheets. o 2 out of 60 selections did not have timely completion of attestations. o 1 out of 60 selections utilized the incorrect allocation rate. • For Health Center Program Cluster: o 1 out of 60 selections utilized the incorrect allocation rate to the grant. o 14 out of 60 selections did not have timely completion of attestations. Cause: The Village did not have adequate policies/procedures in place to timely prepare and complete timesheet attestations and approvals and reconcile to actual expenditures charged. Additionally, the Village relied heavily on manual processes that are more prone to error and did not have an adequate review process to identify and correct calculation errors. Effect or Potential Effect: Without adequate controls in place to detect calculation errors and ensure attestations and timesheets were reviewed in a timely manner, the Village could incorrectly charge expenditures to the Federal program, or not request appropriate reimbursement the Village is entitled to under the terms of the grant. Questioned Costs: Emergency Solutions Grants Program: None Continuum of Care Program Known Questioned Costs: $1,575 Continuum of Care Program Likely Questioned Costs: $172,053 Health Center Program Cluster: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits for the Emergency Solutions Grants Program in 2024 were $377,797. Payroll costs including fringe benefits for the Continuum of Care Program in 2024 were $1,217,865. Matching costs for the Continuum of Care Program in 2024 were $1,896,728. Payroll costs including fringe benefits for the Health Center Program Cluster in 2024 were $1,714,998. Any costs not adequately supported by approved timesheet allocations or in excess of supported allocations are considered questioned costs. Repeat Finding: 2023-003, 2023-004, 2023-005 Recommendation: We recommend that the Village implement policies and procedures to ensure attestations are completed timely (i.e. quarterly) and to ensure timely review for any necessary budget to actual adjustments. Additionally, we recommend implementing system improvements to reduce manual entry and establishing policies to review reimbursement calculations before submission. Views of Responsible Officials: