Finding Text
Federal Agency: Department of Housing and Urban Development and Department of Veterans Affairs Federal Program Name: Emergency Solutions Grant Program and VA Homeless Providers Grant and Per Diem Program Assistance Listing Number: 14.231 and 64.024 Federal Award Identification Number and Year: E20DW37001-2021 and ODMH543-1095-659-CM-20 Pass-Through Agency: North Carolina Department of Health and Human Services, Division of Aging and Adult Services Pass-Through Number(s): 00041416 Award Period: 7/29/2020 - 6/30/2021 and 10/1/2019 - 9/30/2021 Type of Finding: - Material Weakness in Internal Control over Compliance - Material Noncompliance (Modified Opinion) Criteria or specific requirement: In accordance with 2 CFR 200.302(b)(3), the recipient's financial management system must maintain records sufficient to identify the amount, source, and expenditure of federal funds for federal awards, These records must contain information necessary to identify federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. In accordance with the Compliance Supplement, Part 6 Internal Control, 2 CFR section 200.303 requires that non-Federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-Federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, when applicable. In accordance with 2 CFR 200.430(g), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must: (1) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) Be incorporated into the official records of the recipient (3) Reasonably reflect the total activity for which the employee is compensated. Condition: During our testing, we noted the Organization did not have adequate controls to ensure that expenditures of federal awards were properly supported, reasonably reflective of the work performed, and properly reviewed and approved. Questioned costs: Assistance listing number: 14.231 Federal award identification number: E20DW37001-2021 Known questioned costs: $19,334 Assistance listing number: 64.024 Federal award identification number: ODMH543-1095-659-CM-20 Know questioned costs: $51,247 Context: During our testing, we noted the following related to the VA Homeless Providers Grant and Per Diem Program: 40 out of 40 payroll transactions tested for allowable costs and allowable activities were not allocated based on actual time worked on the grant and lacked adequate records. 27 out of 40 tested for allowable costs and allowable activities did not have evidence showing expenditures were allowable under the grant 25 out of 40 tested for allowable costs and allowable activities lacked evidence of review and approval 17 out of 17 tested for period of performance did not have evidence of review and approval 5 out of 17 tested for period of performance lacked appropriate supporting documentation showing the expenditures related to the grant During our testing, we noted the following related to the Emergency Solutions Grant Program: 20 of 40 tested for allowable costs and allowable activities lacked evidence showing the expenditures were allowable under the grant 3 of 40 tested for allowable costs and allowable activities were not allowable under the grant. 6 out of 11 payroll transactions tested for allowable costs and allowable activities were not allocated based on actual time worked on the grant and lacked adequate records. Cause: The Organizations controls were not sufficient to ensure that expenditures of federal funds were supported, reasonably reflecting the work performed under the program, reviewed and approved, and only for allowable costs and allowable activities. Effect: The Organization could have incurred expenses that were not allowable under the grant beyond those identified. Repeat Finding: No Recommendation: We recommend the Organization develop a system of internal controls to ensure that salaries and related payroll expenses are tracked to reasonably reflect the actual time spent working on the programs. In addition we recommend that management retain all documents including evidence of review and approval for all expenditures of federal funds until the latter of the legally required retention period or completion of required audits. Views of responsible officials: There is no disagreement with the audit finding.