Finding Text
FINDING 2022-002 Program Information: COVID-19 Governor?s Emergency Education Relief Fund (84.425C) and COVID-19 Elementary and Secondary School Emergency Relief Fund (84.425U) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR section 200.516(a)(6) (a) The auditor must report the following as audit findings in a schedule of findings and questioned costs: (6) Known or likely fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. Condition: A subrecipient of the Organization reported alleged fraud arising from grant mismanagement and misuse related to GEER and ESSER funding. Cause: Alleged collusion between employees at the subrecipient entity. Effect or Potential Effect: Unknown at this time. Questioned Costs: Not determinable. Context: Two employees of the subrecipient entity are alleged to have colluded in order to perpetrate fraud against the entity. The alleged fraud is purported to include alleged misappropriation of assets as well as alleged direct financial fraud. Once the Organization was alerted to the fraud, a funding hold was placed on the subrecipient entity, pending the results of ongoing investigations. Both employees alleged to have committed the fraud are no longer employed at the subrecipient organization. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the Organization continue to monitor the various investigations of the alleged fraud currently taking place. We further recommend that the Organization consider requiring subrecipient entities to submit disclosures of any workplace nepotism related to personnel with financial or reporting responsibilities. If personnel with reporting responsibilities are related to one another, the organization should require that subrecipient entities detail what additional review process or internal controls will take place to mitigate potential risks that may arise from workplace nepotism. Views of Responsible Officials and Planned Corrective Actions: Management will continue to closely monitor the situation.