Finding 397984 (2023-007)

Material Weakness
Requirement
L
Questioned Costs
$1
Year
2023
Accepted
2024-05-20
Audit: 306700
Auditor: Wegner CPAS

AI Summary

  • Core Issue: Financial reports for COVID-19 funds lacked proper review and accuracy, with significant discrepancies between reported and actual expenses.
  • Impacted Requirements: Compliance with 2 CFR section 200.302(b)(2) was not met due to inadequate internal controls and lack of documentation for financial reporting.
  • Recommended Follow-up: Establish and document internal controls for reporting, ensure the general ledger accurately tracks expenses, and reconcile reports with the general ledger regularly.

Finding Text

Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.302(b)(2) requires the financial management system of a non-federal entity to provide for accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR sections 200.328 and 200.329. Condition and Context: A sample of 4 financial and programmatic reports totaling $204,255 was selected for testing from a population of 20 financial and programmatic reports totaling $900,466. The testing found no support of a review and approval for completeness and accuracy. 4 out of 18 financial reports tested had reported amounts that were not supported by the underlying accounting data. 2 of the 4 had expenses recorded as staffing and repairs and maintenance but were reported as supplies. 1 of the 4 had expenses recorded as supplies but reported as personnel. 1 of the 4 reported other subaward costs as subrecipient expenditures. Cause: There are no written procedures for reporting to require internal controls over reporting or documentation supporting reports to be filed and maintained. Recording expenses in the general ledger by award began in the fiscal year. Reports were not reconciled to the general ledger, the general ledger accounts were not structured to match the budgets, and budgets grouped expenses together that should be reported separately. Effect or Potential Effect: Costs may be disallowed if not approved in the budget or over budget without prior approval. Questioned Costs: $180,975; $4,462 for expenses that were reported greater than budget without prior approval; $176,157 of reported subrecipient costs that are unsupported in the general ledger; $356 of reported supplies that were repairs and maintenance and not included in the budget. Repeat Finding: No. Recommendation: Internal controls over reporting should be designed, implemented, and documented to ensure compliance with 2 CFR section 200.302(b)(2), including who is responsible, what they are reviewing for, when reviews are to take place, and how documentation of the controls will be maintained. The general ledger should be set up to properly capture and track expenses as well as budgets prepared and approved with the actual costs expected to be incurred. Reports should be reconciled to the general ledger. Budgets should be complete and include all line items and not just include all expenses under supplies. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing a grant budget process.

Corrective Action Plan

Recommendation: Internal controls over reporting should be designed, implemented, and documented to ensure compliance with 2 CFR section 200.302(b)(2), including who is responsible, what they are reviewing for, when reviews are to take place, and how documentation of the controls will be maintained. The general ledger should be set up to properly capture and track expenses as well as budgets prepared and approved with the actual costs expected to be incurred. Reports should be reconciled to the general ledger. Budgets should be complete and include all line items and not just include all expenses under supplies. Ac􀆟on Taken: This is a project Finance team is currently working on. The new Compliance Director will manage the grant writing process. During the grant and award process, Compliance, the Program with award, and Finance will establish an appropriate budget which, in turn, will be reflected in general ledger and monitored by the team. The contact persons responsible for this corrective action plan are Alan Branch, Sr VP of Compliance and Workforce Development, the new Compliance Director, Wendi Speed, CFO, and the entire Finance Team. The anticipated completion date is June 30, 2025.

Categories

Questioned Costs Subrecipient Monitoring Reporting

Other Findings in this Audit

  • 397982 2023-005
    Material Weakness
  • 397983 2023-006
    Material Weakness
  • 397985 2023-008
    Material Weakness
  • 397986 2023-009
    Material Weakness
  • 397987 2023-010
    Significant Deficiency
  • 397988 2023-005
    Material Weakness
  • 397989 2023-006
    Material Weakness
  • 397990 2023-007
    Material Weakness
  • 397991 2023-008
    Material Weakness
  • 397992 2023-009
    Material Weakness
  • 397993 2023-010
    Significant Deficiency
  • 397994 2023-005
    Material Weakness
  • 397995 2023-006
    Material Weakness
  • 397996 2023-007
    Material Weakness
  • 397997 2023-008
    Material Weakness
  • 397998 2023-009
    Material Weakness
  • 397999 2023-010
    Significant Deficiency
  • 974424 2023-005
    Material Weakness
  • 974425 2023-006
    Material Weakness
  • 974426 2023-007
    Material Weakness
  • 974427 2023-008
    Material Weakness
  • 974428 2023-009
    Material Weakness
  • 974429 2023-010
    Significant Deficiency
  • 974430 2023-005
    Material Weakness
  • 974431 2023-006
    Material Weakness
  • 974432 2023-007
    Material Weakness
  • 974433 2023-008
    Material Weakness
  • 974434 2023-009
    Material Weakness
  • 974435 2023-010
    Significant Deficiency
  • 974436 2023-005
    Material Weakness
  • 974437 2023-006
    Material Weakness
  • 974438 2023-007
    Material Weakness
  • 974439 2023-008
    Material Weakness
  • 974440 2023-009
    Material Weakness
  • 974441 2023-010
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $798,720
93.558 Temporary Assistance for Needy Families $91,755
17.261 Wia Pilots, Demonstrations, and Research Projects $68,787
84.425 Education Stabilization Fund $29,384
94.006 Americorps $26,125
14.218 Community Development Block Grants/entitlement Grants $18,750
93.268 Immunization Cooperative Agreements $10,954
16.726 Juvenile Mentoring Program $5,901