Finding Text
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Community Service Block Grant Assistance Listing Numbers: 93.569 Federal Award Identification Number and Year: 2301MDCOSR 2401MDCOSR Pass-Through Agency: Maryland Department of Housing and Community Development Pass-Through Number(s): CSBG-ND=2023-NSCI CSBG-ND-2024-NSCI Award Period: 10/1/2022 - 9/30/2024 10/1/2023 - 9/30/2025 Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: The CSBG Act at 42 USC 9910(a), requires nonprofit organizations administer CSBG through a board comprising: (i) One-third (1/3) of the members be elected representatives in the community or their designee (the elected official must be holding office on the date of selection). There is a provision that allows for appointed government officials, or their designee, to be counted in meeting this requirement. (ii) Not fewer than one-third (1/3) of the board members are chosen in a democratic selection process adequate to assure that these members of the board are representative of the low-income individuals and families served. Additionally, each low-income representative must reside in the neighborhood served. (iii) The remaining board members are officials and members of business, industry, labor, religious, law enforcement, education, or other major groups and interests in the community served. The Community Services Block Grant Agreements between the Maryland Department of Housing and Community Development and the Neighborhood Service Center, Inc. state that if the grantee is other than a local government or agency thereof, it has established at least a 15-member board of directors which acts as the policy making body of the grantee and which is responsible for the expenditure of the grant. The composition of the board of directors is as follows: (i) One third of the members are elected public officials currently holding office, or their representatives, except that if the number of elected officials reasonably available and willing to serve is less than one third of the membership of the board, members on the board who are appointed public officials may be counted in meeting the one third requirements; (ii) At least one third of the members are persons chosen in accordance with democratic selection procedures adequate to assure that they are representative of low-income individuals and families in the neighborhood served, and each such representative of low-income individuals and families selected to represent a specific neighborhood within a community resides in the neighborhood represented by the member; and (iii) The remaining members are officials or members of industry, loan, religious, welfare, education or other major groups and interest in the area served by the grantee. (iv) The grantee will notify the Department in writing of all board vacancies within 30 days of the occurrence and will provide a plan for filling such vacancies. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: The Neighborhood Service Center, Inc. did not maintain a board comprised of 15 members and was unable to provide documentation to substantiate that appropriate and timely notifications were made to the Maryland Department of Housing and Community Development of board vacancies. Neighborhood Service Center, Inc. did not have effective controls in place for monitoring and reporting on board vacancies. Questioned costs: Undetermined. Cause: Controls were not operating effectively to ensure reporting was performed and documented in a timely manner, in accordance with the requirements. Effect: There is an increased risk of improper oversight of federal funds. Repeat Finding: No. Recommendation: We recommend the Neighborhood Service Center, Inc. reevaluate its current process, implement proper controls, and perform additional training over fiduciary duties and responsibilities under the CSBG Act. The Neighborhood Service Center, Inc. should adhere to the board composition and vacancy reporting requirements. Documentation should be readily available for audit. Views of responsible officials: In response to the recommendations, effective for immediate implementation, The Executive Director and Deputy Director of the Neighborhood Service Center are actively recruiting individuals to join the Board. The Deputy Director, or their designee, will provide information to the Maryland Department of Housing and Community Development on the Board composition and vacancies on a monthly basis.