Finding Text
Lack of Proper Updating and Review of Agency Administration Allocations Federal Agency: U.S. Department of Agriculture Pass-Through Agency: MN DEED Assistance Listing Number(s):17.258, 17.278 and 17.259 (WIOA Cluster) Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: MN DEED and various counties Assistance Listing Number: 93.558 (TANF) Compliance Requirement: Allowable Costs Criteria: Federal regulations require organizations to maintain records that clearly identify the source and use of funds for federally funded activities. This includes documentation supporting the allocation of costs to ensure they are reasonable, allowable, and allocable. Additionally, organizations must implement internal controls, including review procedures, to ensure the accuracy and compliance of financial allocations. Condition: For the fiscal year ended June 30, 2025, the Organization updated their agency administration allocation monthly. On February 5, 2025 an update should have been entered into the system, however, it was missed in error and the prior agency administration allocation was applied through June 2025. For the WIOA Cluster 6 of the 60 disbursements tested (totaling $234) were allocated using the January 2025 agency administration allocation without evidence that the agency allocation was updated or reviewed during the remaining of the fiscal year. For TANF 6 of the 60 disbursements tested (totaling $245) were allocated using the January 2025 agency administration allocation without evidence that the agency allocation was updated or reviewed during the remaining of the fiscal year. Cause: The issue was caused by a breakdown in internal controls over the timely updating and review of agency administrative allocations, resulting in the continued use of outdated allocation rates after January 2025. Effect: The use of outdated allocation rates may have resulted in costs being improperly allocated to federal programs, potentially leading to noncompliance with allowable cost requirements. Questioned Costs: None Recommendation: The Organization should ensure agency administration allocation schedules are updated and reviewed monthly to reflect current operations. Management should document the review and approval of allocation updates were properly made in the system. Responsible Officials Response: When migrating to the new accounting system, CMJTS did not originally have a process to ensure allocations were updated appropriately. We have since implemented a review process to ensure that all allocations are updated accurately and timely.