Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: TRIO Cluster – Educational Opportunity Centers
Assistance Listing Number: 84.066
Federal Award Identification Number and Year: P066A210018 - 2022
Award Period: September 1, 2022 through August 31, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance
Compliance Requirement – Cash Management
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, subpart D, § 200.303 requires that non-federal entities must evaluate and monitor their compliance with statutes, regulations, and the terms and conditions of Federal awards.
Condition: We tested six (6) cash drawdowns for the fiscal year 2023 grant program as part of our cash management testing. Three (3) of the cash drawdowns tested did not have documented evidence of review and approval over the benefits expense rate drawn on the grant program.
Questioned costs: None
Context: Three (3) out of six (6) cash drawdown requests tested. The sampling was a statistically valid sample. During testing, we noted the Corporation requested a flat percentage rate of 20.6% for benefits expense reimbursements. This flat rate applied by the Corporation did not agree to the approved grant budget of 20% for the fiscal year 2023 grant program. We noted the difference did not result in noncompliance with the grant award due to the fact the total reallocation did not exceed the 25% reallocation threshold of the grant award as allowed by the Department of Education.
Cause: Internal controls were not implemented to ensure the benefits expense reimbursement rate was updated subsequent to the rate change for the fiscal year 2023 grant program.
Effect: The federal program funds were drawn down at the incorrect rate for the requests tested. Management corrected the reimbursement rate in the drawdown template subsequent to our communication about the condition.
Repeat Finding: No
Recommendation: We recommend management perform a documented review of the federal drawdowns to the ensure benefits reimbursement rate is timely updated in accordance with the requirements new grant awards.
Views of Responsible Officials: Management notes that this finding did not result in any questioned or improper cost to the Federal awarding agency. The impact of this finding, had the matter not been detected, would have been that slightly more costs would have been drawn down as benefits and slightly less would have been drawn down as salaries. Both are permitted costs under the Uniform Guidance and a shift of costs from salaries to benefits does not require requesting prior approval from the Federal awarding agency. VSAC also notes the presence and performance of compensating controls which would preclude the charging to the Department of Education of any costs of a nature not permitted under the Uniform Guidance or by the grant application budget. VSAC also notes the presence and performance of compensating controls which would preclude drawing down more than the annual maximum amount permitted under this Federal award.