Finding Text
We identified a significant deficiency in internal control over compliance related to matching requirements related insufficient internal controls to verify non-federal funding source match and the lack of documented personnel support costs and related effort for the REAP program. Criteria: Under the Uniform Guidance, the auditee is responsible for ensuring that required matching or cost-sharing contributions are from allowable sources and meet all applicable federal program requirements, including any supplement-not-supplant provisions. Matching contributions must be properly documented and verifiable, and internal controls should be designed and implemented to provide reasonable assurance that: • Reported match is accurate and supported; and • Matching contributions are not funded with unallowable sources (such as other federal awards), nor used to meet matching or cost-sharing requirements of other federal programs, particularly where strict supplement-not-supplant language applies. Condition: The auditee entered into memoranda of understanding (MOUs) with participating school districts under which the districts agreed to contribute salary costs as part of the required 50 percent match for the program. The MOUs stated that the auditee would develop and provide a template for the districts to complete and submit, capturing certain data or confirming that: • Capturing time spent (e.g. hours for each participant) on the program to justify the 25% amount of the salary match with the corresponding paid fringe benefits; • The salary amounts were equal to or less than published agency information if actual salaries are not being used; and • The salary amounts reported as match were not funded by other federal awards or otherwise paid with federal dollars, consistent with the program’s strict supplement-not-supplant requirements.The auditee did not develop or implement the contemplated template or an alternative formal mechanism to obtain written confirmation from the districts that the salary match they provided: • Was not funded by federal sources; and • Was not simultaneously used to meet requirements of other federal awards. The auditee did obtain and use published salary rate information from the school districts to calculate the amount of salary match (25 percent of the annual salary for participating job roles); however, no documented certifications or equivalent evidence were obtained from the districts addressing the funding source of the salaries or compliance with the strict supplement-not-supplant requirement. Cause: Although management conceptually designed a control (district certifications via an auditee-provided template) and incorporated this concept into the MOUs with the school districts, management did not follow through to develop, implement, and operate that control. As a result, management relied on salary rate information and informal understanding of the districts’ participation, without implementing a formal control to obtain and retain documentation from the districts regarding the funding source of the salaries used as match and compliance with the program’s strict supplement-not-supplant provisions. Effect/Risk: In the year under audit, salary and related fringe benefit match contributed by the school districts and the Center’s support cost to Voorhees University totaled approximately $4,224,800, representing about 67 percent of the total reported match. However, in the absence of a designed and implemented control to obtain written confirmations or other equivalent documentation from the districts regarding the funding source of these salary costs and compliance with strict supplement-not-supplant requirements: • There is an increased risk that some or all of the reported salary match could be funded, directly or indirectly, by federal sources or used to support other federal awards; and • The auditee may not be able to demonstrate that the required 50 percent match was fully met with allowable, non-supplanting sources if questioned by the federal awarding agency or auditors.This deficiency in internal control over compliance creates a future risk of noncompliance with matching and supplement-not-supplant requirements and could result in questioned costs related to the salary and fringe benefit match and support costs to Voorhees University, and, more broadly, to the required match for the award. Recommendation: We recommend that the auditee design and implement formal controls over the documentation of partner-provided matching contributions, including: 1. Developing and using a standardized certification form (consistent with the MOUs) to be completed and signed by an appropriate official at each participating school district, attesting that: • The salary amounts reported as match are accurate and supported by underlying records (e.g., schedules of participating staff and time spent on the program with support documents from the district of current salary by position). • If using published district rates from credible sources, request the school district HR personnel to highlight comparable salary of each participant being used for the match. • The salaries used as match are not funded by federal awards and are not also being used to meet the matching or cost-sharing requirements of other federal programs, in accordance with the program’s strict supplement-not-supplant requirements. 2. Establishing procedures to obtain, review, and retain these certifications and any supporting documentation on at least an annual basis, and to follow up on missing, incomplete, or inconsistent information. 3. Periodically reassessing the design of match-related controls to ensure they continue to address the specific risks associated with strict supplement-not-supplant language in the federal program’s terms and conditions. Views of Responsible Officials: Management agreed that the templates described above were not implemented per the MOUs. Management will develop recommended templates as described above that will support that the match was achieved and document the certifications with federal award records.