Finding 388137 (2023-006)

Material Weakness Repeat Finding
Requirement
A
Questioned Costs
-
Year
2023
Accepted
2024-03-28

AI Summary

  • Core Issue: EmployIndy failed to formally review and approve 12 selected WIOA non-payroll expenditures, risking inaccurate charges to the federal grant.
  • Impacted Requirements: This finding highlights a lack of internal controls, violating compliance standards set by 2 CFR 200.403 and 2 CFR 200.303 regarding allowable costs and internal control effectiveness.
  • Recommended Follow-Up: Implement a multi-stage review process for WIOA expenditures and ensure proper documentation is organized and retained to support reported amounts.

Finding Text

FINDING 2023-006 Information on the federal program: Federal Agency: Department of Labor Pass-Through Entity: Indiana Department of Workforce Development Federal Program: WIOA Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Activities Allowed or Unallowed Audit Findings: Material Weakness, Internal Controls Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must 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 terms and conditions of the Federal award. Condition: EmployIndy did not formally review and approve 12 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations. Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures. Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant. Questioned costs: There are no questioned costs. Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified expenditures that are not formally reviewed by management for allowability under the WIOA grant. Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-006 in the prior report. Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.

Corrective Action Plan

Description of Corrective Action Plan: Prior to the completion of this audit, EmployIndy already made a number of changes to its financial operations. It parted ways with its Chief Financial Officer and procured the services of an outside Certified Public Accounting firm to begin the process of reviewing and updating its financial operations. In addition, it hired an Executive Vice President of Finance and Operations to lead the final development and implementation of updated financial processes. The Executive Vice President of Finance and Operations has worked with EmployIndy’s Board of Directors and Finance Committee to document a plan for improving EmployIndy’s financial operations across the board by the 2nd quarter of Calendar Year 2024. As a part of this plan, EmployIndy’s Financial Operations Team, led by the Controller, has already begun to update the expenditure approval process. This process requires that supporting documentation be retained within the financial management system. Additionally, the review and approval process consists of multiple review and approval steps by program management and financial operations staff with specific focus on retention of supporting documentation and clear connections between expenditures being allocated to WIOA and other funding clusters and documentation supporting such allocations. All EmployIndy staff will be retrained on the updated expenditure submission, review, approval, and documentation processes. Additionally, EmployIndy’s Financial Operations, Grants & Contracts, and Program Management teams will provide guidance and training to EmployIndy’s subrecipients and contractors covering the proper process for submitting supporting documentation with invoices or accrued expenditure reports. These documentation requirements will ensure that supporting information directly and clearly ties back to invoices and/or accrued expense reports. EmployIndy’s Executive Vice President for Finance and Operations will work with other members of the Executive Team and other senior leaders to hold all staff accountable for following this process. Responsible Party and Timeline for Completion: Corrective Activity Responsible Party Timeline for Completion Develop training for the timely submission and proper submission, review, and approval of accrued expenditure reports and invoices, and appropriate documentation requirements Controller and Associate Director of Grants & Contracts 1st Quarter of Calendar Year 2024 Train internal EmployIndy staff and external subrecipient and contractor staff on properly submitting, reviewing, and approving accrued expenditure reports and invoices, and including proper documentation supporting expenditures Controller, Associate Director of Grants & Contracts, and EmployIndy Program Leadership By 2nd Quarter of Calendar Year 2024 Hold Financial Operations, Program Leadership, and subrecipient and contractor staff accountable for following established processes Executive Vice President of Finance and Operations Ongoing

Categories

Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking Subrecipient Monitoring

Other Findings in this Audit

  • 388133 2023-005
    Material Weakness Repeat
  • 388134 2023-005
    Material Weakness Repeat
  • 388135 2023-005
    Material Weakness Repeat
  • 388136 2023-005
    Material Weakness Repeat
  • 388138 2023-006
    Material Weakness Repeat
  • 388139 2023-006
    Material Weakness Repeat
  • 388140 2023-006
    Material Weakness Repeat
  • 388141 2023-007
    Material Weakness Repeat
  • 388142 2023-007
    Material Weakness Repeat
  • 388143 2023-007
    Material Weakness Repeat
  • 388144 2023-007
    Material Weakness Repeat
  • 388145 2023-008
    Material Weakness Repeat
  • 388146 2023-008
    Material Weakness Repeat
  • 388147 2023-008
    Material Weakness Repeat
  • 388148 2023-008
    Material Weakness Repeat
  • 388149 2023-009
    Material Weakness
  • 388150 2023-009
    Material Weakness
  • 388151 2023-009
    Material Weakness
  • 388152 2023-010
    Significant Deficiency
  • 388153 2023-010
    Significant Deficiency
  • 388154 2023-010
    Significant Deficiency
  • 964575 2023-005
    Material Weakness Repeat
  • 964576 2023-005
    Material Weakness Repeat
  • 964577 2023-005
    Material Weakness Repeat
  • 964578 2023-005
    Material Weakness Repeat
  • 964579 2023-006
    Material Weakness Repeat
  • 964580 2023-006
    Material Weakness Repeat
  • 964581 2023-006
    Material Weakness Repeat
  • 964582 2023-006
    Material Weakness Repeat
  • 964583 2023-007
    Material Weakness Repeat
  • 964584 2023-007
    Material Weakness Repeat
  • 964585 2023-007
    Material Weakness Repeat
  • 964586 2023-007
    Material Weakness Repeat
  • 964587 2023-008
    Material Weakness Repeat
  • 964588 2023-008
    Material Weakness Repeat
  • 964589 2023-008
    Material Weakness Repeat
  • 964590 2023-008
    Material Weakness Repeat
  • 964591 2023-009
    Material Weakness
  • 964592 2023-009
    Material Weakness
  • 964593 2023-009
    Material Weakness
  • 964594 2023-010
    Significant Deficiency
  • 964595 2023-010
    Significant Deficiency
  • 964596 2023-010
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
17.259 Wia Youth Activities $1.75M
17.258 Wia Adult Program $1.22M
21.027 Coronavirus State and Local Fiscal Recovery Funds $718,290
17.225 Unemployment Insurance $711,000
17.278 Wia Dislocated Worker Formula Grants $516,485
17.277 Covid-19 - Workforce Investment Act (wia) National Emergency Grants $253,114
17.285 Apprenticeship USA Grants $143,711
14.218 Community Development Block Grants/entitlement Grants $129,943
17.207 Employment Service/wagner-Peyser Funded Activities $120,000
84.425 Education Stabilization Fund $113,633
84.126 Rehabilitation Services_vocational Rehabilitation Grants to States $95,094