Finding Text
2023-003 EARMARKING (REPEAT OF PRIOR YEAR FINDING 2022-03)
Federal Program Information:, Federal Agency and Program Name, Federal Assistance Listing Number
U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278
Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”
Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Local Areas:
(1) A local area may expend no more than 10 percent of the Adult, Dislocated Worker, and Youth Activities funds allocated to the local area under Sections 128(b) (WIOA, 128 Stat. 1502) and 133(b) (WIOA, 128 Stat. 1516) for within state allocations. The funds provided for administrative costs by one of the three fund sources (Adult, Dislocated Worker, Youth Activities) can be used for administrative costs of the other two sources.
(2) The amount that may be spent on incumbent worker training may not exceed 20 percent of the amount of the combined total of federal funds allocated to local areas to carry out the Adult and Dislocated Worker programs for a program year (20 CFR section 680.800; Section 134(d)(4), WIOA, 128 Stat. 1535).
(3) WIOA authorizes workforce investment areas, with the approval of the governor, to transfer up to 100 percent of the Adult Activities funds to Dislocated Workers Activities, and up to 100 percent of Dislocated Workers Activities funds to Adult Activities (Section 133(b)(4), WIOA, 128 Stat. 1518).
(4) At the discretion of the local board, not more than 10 percent of the total funds allocated to the local area under section 128(b) and under section 133(b)(2)-(3) may be used to implement a pay-for-performance contract strategy as defined in WIOA Section 3(47) (WIOA Section 129(c)(1)(D) and 134(d)(1)(A)(iii)).
(5) As no state has received prior approval for implementation of a PFP contract strategy, no funds from the program years prior to PY 2019 are available for PFP contract strategies or for the accompanying extended disbursement. However, these funds could still be used for other types of performance-based contracting, but the life of those funds remains the normal two-year limit for local WIOA grant funds.
Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities:
(1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506).
(2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510).
Condition: Upon inquiry of management, it was noted that the Board did not perform procedures to ensure that the expenditures of the WIOA Cluster were within the earmarking requirements noted in the Uniform Guidance during the fiscal year ended June 30, 2023.
Questioned Costs: Unknown
Context: Total federal expenditures for the WIOA Cluster were $4,165,604 for the year ended June 30, 2023.
Cause: The Board did not perform the appropriate procedures to verify that the expenditures of the WIOA Cluster were within the earmarking requirements noted within the Uniform Guidance.
Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award.
Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed.
Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.