Finding Text
Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number: SLFRP1610 Award Period: July 1, 2022 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance with respect to record retention Specific requirement-criteria: The Organization is required to provide support that internal controls over compliance are in place. Condition: Internal controls over compliance of allowable costs were not in place to support that the organization had implemented controls to prevent, detect, or correct errors in calculating provider payments or payroll that were allocated to the federal program. Questioned costs: None Context: Provider Payments Providers payments calculations are not reviewed for errors by a separate individual. In a sample of 32, the amount used in the calculation for 20 providers was based on an agreement that was not signed by both the provider and the Organization’s CEO or it was based on an agreement signed by both parties during 2024 or 2025. A copy of the signed provider agreement was not consistently retained by the Organization to support the amount both parties agreed to. In a sample of 32, 12 attendance sheets did not support the attendance number used in the provider payment calculation. The attendance number used was based on an estimate of students as the provider did not turn in the attendance sheet timely, but the Organization wanted to ensure the provider was paid timely. Had actual attendance numbers been used rather than estimated, the amount due to the provider would have decreased by $9,225. In a sample of 32, the amount used in the calculation for 4 providers was based on an executed agreement that indicated the maximum amount to be used in the calculation for payment was lower. Rates used in the calculation change periodically based on various factors, however, the agreement was not reviewed to ensure the updated amount didn’t exceed the maximum indicated. Payroll In a sample of 10, there was no record of timesheet approval by a supervisor or of the overall approval of the associated payroll register. Other General Disbursements In a sample of 50, there was no check signature indicating approval of disbursement on 1 payment. The check was issued without being signed by a member of the Organization. Cause: The Organization is in the startup phases and the Uniform Grant Requirements are new as 2022 was the first year federal funding was received and the audit for 2022 was completed during 2024. Formal policies and procedures over record retention were not yet in place when getting the Organization's operations started and recommendations from the prior year audit were not received during 2023. Effect or potential effect: The amounts paid to providers and employees could be improperly calculated resulting in an error in the funds covered under the federal grant. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-003. Recommendation: We recommend that the management and finance staff work on retaining documentation and training staff to ensure processes and controls are in place over provider payment calculations and payroll. We also recommend a formal check signing process is implemented to ensure authorization of disbursement is documented appropriately. Management response: We agreed with the above comment and will update our policies and procedures to incorporate the recommendations above.