Finding Text
Criteria: According to 2 CFR § 200.77 and § 200.343 of the Uniform Guidance, federal awards must be obligated and expended only during the authorized period of performance as stated in the award documents. Expenditures incurred outside of this time frame are considered unallowable and subject to repayment. Condition: During a performance review conducted by the U.S. Department of Housing and Urban Development (HUD), the Institution was found to have expended $247,000 in federal funds outside the period of performance established for the Emergency Shelter Grant Program under the CARES Act. These expenditures were not in accordance with federal requirements and were deemed unallowable by HUD. Effect: The Institution incurred unallowable costs totaling $247,000. As a result, HUD has required that the Institution return these funds. Noncompliance with period-of-performance requirements can also increase the risk of future disallowances and may impact eligibility for future federal funding. Cause: The noncompliance resulted from the lack of effective internal controls to monitor the period of performance, limited communication between departments, and insufficient knowledge of federal grant requirements within the accounting department. There was a lack of formal review of the funding agreement terms before processing reimbursements or direct charges, which led to the oversight. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Implement a Period Monitoring System: Establish a formal process for tracking the period of performance for each grant, with automatic alerts or calendar reminders for start and end dates. 2. Grant Agreement Review Procedures: Require a formal review of grant agreements and performance periods prior to incurring or approving expenses to ensure compliance. 3. Training for Finance and Program Staff: Provide training on Uniform Guidance cost principles and federal compliance requirements to staff involved in program administration and finance. 4. Periodic Reconciliation: Conduct periodic reconciliations of expenses charged to federal grants to ensure they are within the allowed timeframe and scope. 5. Communicate with Auditors: Work closely with the external auditors to ensure that any potential delays in the audit process are identified early and mitigated to meet the submission deadline. Questioned cost: $247,000 Sampling was statistically valid: Yes