Finding 1222657 (2024-002)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2024
Accepted
2026-07-01
Audit: 406231
Auditor: WEGNER CPAS

AI Summary

  • Core Issue: UCM failed to maintain effective internal controls, leading to non-compliance with federal requirements for allowable costs on TANF disbursements.
  • Impacted Requirements: Costs charged must be allowable, allocable, and supported as per 2 CFR 200.403–200.405; inadequate documentation and controls were identified.
  • Recommended Follow-Up: UCM should create formal policies for cost allowability, enhance documentation standards, and provide Uniform Guidance training to staff involved in grant accounting.

Finding Text

Assistance Listing Number: 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families (TANF) Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entity: Virginia Department of Social Services Pass-Through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2023 through June 30, 2024 Criteria or Specific Requirement: 2 CFR 200.403–200.405 requires costs charged to a federal award must be allowable, allocable, and adequately supported. Condition: UCM did not maintain effective internal controls to ensure that non-payroll-related disbursements charged to the federal award were allowable. During planning, auditor identified material noncompliance of the non-payroll-related disbursements, and no further testing was performed. Specific issues included:  Other direct costs o Disbursements lacked sufficient documentation to support allowability for costs charged based on budget. o Prepaid expenses for a database license and gift card inventories did not have adequate controls or supporting records. Cause: UCM lacked formal written policies and procedures governing allowability and documentation standards. Significant management personnel turnover resulted in inadequate federal grant knowledge and inconsistent application of Uniform Guidance requirements. Family Achievement supervisors can select any supervisor name to sign off/approve costs for allowability and payment. Effect or Potential Effect: Unallowable, unsupported, or inaccurately allocated costs were charged to the federal award. UCM may be required to repay federal funds and implement corrective actions. Questioned Costs: Include identified prepaids and costs in excess of actual: 2025 Database licensing: $40,000 Gift cards held in inventory: 12,853 Budgeted costs charged in excess of actual: 30,770 De minimis indirect cost rate applied to above costs: 8,362 Total known questioned costs: $91,985 Recommendation: UCM should develop and implement comprehensive written policies and procedures addressing allowability and documentation standards. Controls should ensure only actual costs are charged. Electronic signatures should have IT controls in place to allow for only the individual signing off to select their own name. Staff responsible for grant accounting should receive Uniform Guidance training. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.

Corrective Action Plan

UCM will develop and implement comprehensive written policies and procedures addressing cost eligibility, documentation standards, and the requirement that only actual costs are charged to federal awards. The procedures will require costs to be supported by appropriate source documentation, such as invoices, receipts, payroll records, allocation schedules, contracts, approvals, proof of payment, and other relevant records. UCM will implement a review process to ensure costs charged to federal awards are based on actual expenditures recorded in the accounting system, properly supported, charged to the correct funding source, and consistent with Uniform Guidance requirements. Budgeted, estimated, or unsupported amounts will not be charged to federal awards unless specifically permitted by the award terms and adjusted to actual costs within the required reporting period. UCM will also strengthen controls over electronic signatures used in grant, payroll, expenditure, or approval documentation. Electronic signature procedures will require appropriate IT controls so that only the individual providing approval can select or apply their own name. UCM will review user access, system permissions, and approval workflows to ensure signatures are tied to the appropriate user and that evidence of approval is retained. Staff responsible for grant accounting, payroll allocation, accounts payable, electronic approval workflows, and federal award compliance will receive Uniform Guidance training and training on the updated documentation, actual cost, and electronic signature procedures. Responsible for Corrective Action: Cristina Schoendorf, Chief Program Officer Shruti Jha, Senior Director of Finance Deborah Ewell, Director of Human Resources Laura D’Ambrogi, Grants Manager IT Partner Anticipated Completion Date: December 31, 2026

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1222656 2024-001
    Material Weakness Repeat
  • 1222658 2024-003
    Material Weakness Repeat
  • 1222659 2024-004
    Material Weakness Repeat
  • 1222660 2024-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.558 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES $1.20M
97.010 CITIZENSHIP EDUCATION AND TRAINING $72,191