Finding Text
2023-002 Improve Controls and Documentation Over Allowability of Costs Federal Agency: U.S. Department of Agriculture Cluster/Program: Child Nutrition Cluster Award Name: National School Lunch Program AL Number(s): 10.553/10.555/10.559/10.582 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name: Title I Grants to Local Educational Agencies AL Number(s): 84.010 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Preschool Grants AL Number(s): 84.027/84.173 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the City is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context A sample of invoices was tested in order to determine if costs were allowable and adequately approved. As a result of our testing, it was determined that invoices were not approved for two transactions in the Child Nutrition Cluster, four transactions in the Coronavirus State and Local Fiscal Recovery Fund, two transactions in the Title I program, and one transaction in the Special Education Cluster. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 10.553/10.555/10.559/10.582 Child Nutrition Cluster $300 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Fund $247,537 84.010 Title I Grants to Local Educational Agencies $3,770 84.027/84.173 Special Education Cluster $4,267 Recommendation The City should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal award transactions are allowable and in accordance with the applicable cost principles. SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.