Finding 499629 (2023-002)

Material Weakness
Requirement
B
Questioned Costs
$1
Year
2023
Accepted
2024-09-30

AI Summary

  • Core Issue: Duplicate expenses were submitted for reimbursement, violating federal cost principles.
  • Impacted Requirements: Compliance with 2 CFR Part 200 on allowable costs and effective internal controls is lacking.
  • Recommended Follow-Up: Management should enhance internal controls to prevent future duplicate submissions and ensure compliance.

Finding Text

2023-002 - Allowable Costs/Cost Principles Criteria: According to federal regulations, expenditures charged to federal grants must follow the allowable cost principles found in 2 CFR Part 200, subpart E. Additionally, 2 CFR.200.303 requires nonfederal entities to, among other things, 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. Condition: During our testing of federal expenditures, we noted that certain expenses were submitted twice for reimbursement. Cause: Internal controls surrounding the review and submission of reimbursement requests are not properly implemented to detect and correct errors. Effect: The Organization submitted duplicate expenditures in two instances. Questioned Costs: $83,718 Statistical Sampling: Statistical sampling was not used in making sample selections. Recommendation: We recommend that management of the Organization review internal controls and ensure they are properly designed and implemented to ensure that expenditures are allowable under federal regulations. Views of Responsible Officials: Management agrees with this finding and their response is included in the corrective action plan.

Corrective Action Plan

Condition: During our testing of federal expenditures, we noted that certain expenses were submitted twice for reimbursement. Response: The Organizations’ Board and Chief Executive Officer (CEO) and key HCEDC Staff recognize the need to further refine internal controls. Management recognized one instance in which duplicate reimbursement occurred. The duplication was reported to the funding agency (Indiana Department of Education) upon discovery and reconciled in order to place grant expenditures in good standing. Corrective Actions Taken: HCEDC staff has been working with CliftonLarsonAllen since March 2024 to design and implement new controls to prevent these types of errors occurring in the future. HCEDC is also onboarding a Grants Management Software to provide additional tracking and reporting transparency for funders and audit purposes. Timeline for Implementation: • Grant Management Software – October 2024 • CliftonLarsonAllen LLP engaged – March 2024

Categories

Questioned Costs Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking Cash Management

Other Findings in this Audit

  • 499630 2023-003
    Material Weakness
  • 499631 2023-004
    Material Weakness
  • 499632 2023-002
    Material Weakness
  • 499633 2023-003
    Material Weakness
  • 1076071 2023-002
    Material Weakness
  • 1076072 2023-003
    Material Weakness
  • 1076073 2023-004
    Material Weakness
  • 1076074 2023-002
    Material Weakness
  • 1076075 2023-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $332,334