Finding 372134 (2023-002)

Finding 2023‐002 Material weakness in internal controls over compliance for earmarking and material noncompliance for earmarking in the U.S. Refugee Admissions Program. Federal Agency: Department of State Pass-Through Agency: Lutheran Immigration and Refugee Service Program Title: U.S. Refugee Admissions Program Assistance Listing Number: 19.510 Award Numbers: 323-22-00 and 323-23-00 Award Periods: January 1, 2022 to September 30, 2022 and October 1, 2022 to September 30, 2023 Criteria The underlying awards identify an earmarking requirement requiring thresholds of direct assistance to be provided on behalf of each eligible arriving refugee. Award number 323-22-00 states at least $1,225 is to be used to cover payments made to or on behalf of a refugee for cash disbursements or for material goods, as needed, to meet the requirements of the program. No less than $1,025 of this $1,225 must be spent for or on behalf of each refugee during that refugees reception and replacement (R&P) service delivery period. Up to $200 of this $1,225 may be pooled into a flexible fund to spend on behalf of other vulnerable refugees assigned to the same affiliate/sub-office who have unmet needs during their R&P period (within 90 days of the refugee’s arrival date). Award number 323-23-00 states at least $1,275 is to be used to cover payments made to or on behalf of refugees for cash disbursements or for material goods, as needed, to meet the requirements of the program. No less than $1,075 of this $1,275 must be spend for or on behalf of each refugee during that refugees reception and replacement (R&P) service delivery period. Up to $200 of this $1,275 may be pooled into a flexible fund to spend on behalf of other vulnerable refugees assigned to the same affiliate/sub-office who have unmet needs during their R&P period (within 90 days of the refugee’s arrival date). Condition/Context for Evaluation During our audit we were unable to obtain reporting that identified how much direct assistance was made to or on behalf of each refugee. Effect or Potential Effect The Organization may not have met earmarking requirements as outlined in the underlying award agreements and have controls to effectively monitor that earmarking requirements were met. Questioned Costs Not applicable. Cause Internal controls were not in place to ensure earmarking requirements were met. Repeat Finding Not applicable. Recommendation We recommend that the Organization implement a process to identify the value of direct assistance that was provided to each eligible refugee as recorded within the financial records. Further, we recommend internal controls over compliance are implemented to monitor that direct assistance is distributed to meet the earmarking requirements included within the grant terms. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.