Finding Text
Program Information: Student Financial Assistance Cluster (ALN: Various), Title III Strengthening Historically Black Colleges and Universities Program (ALN: 84.031B), TRIO Cluster (ALN: Various) and Education Stabilization Fund - Higher Education Emergency Relief Fund (ALN: Various)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): A. Activities Allowed or Unallowed, B. Allowable Cost and Cost Principles, C. Cash Management, E. Eligibility, F. Equipment and Real Property Management, G. Matching, Level of Effort and Earmarking, H. Period of Performance, I. Procurement, Suspension and Debarment, L. Reporting, and N. Special Tests and Provisions - Federal regulations require that the University implement internal controls and policies and procedures over compliance with respect to all federal funding requirements.
Condition: During the current year, the University did not have appropriate internal controls in place to ensure federal programs are properly administered in accordance with the respective Federal compliance requirements. Given the overall lack of internal controls surrounding the administration of federal programs during the year, federal expenditure reconciliations were not performed, and management was unable to provide documentation supporting the University’s compliance with certain requirements that are considered direct and material to the University’s major federal programs.
Cause: Insufficient internal controls and lack of administrative oversight regarding the compliance and administration over federal funding.
Effect or Potential Effect: We were unable to determine whether the University was in compliance with certain compliance requirements for the year ended June 30, 2021. This resulted in a disclaimer of opinion on all 4 major federal programs for the year ended June 30, 2021.
Questioned Costs: Indeterminable.
Context: During our audit procedures, we noted the following:
• Sufficient, appropriate documentation supporting certain expenditures incurred (including whether incurred during the period of performance), as well as the approval and disbursement of federal funds expended could not be provided by management.
• The University was unable to appropriately reconcile federal drawdowns to expenditures incurred within the general ledger.
• Documentation supporting the appropriate eligibility of students under certain federal awards could not be provided by management.
• Equipment and property purchased with federal funds were not appropriately tagged, tracked and inventoried as required.
• Documentation supporting that level of effort requirements were met for identified key personnel could not be provided by management. Additionally, supporting documentation for matching and earmarking could not be provided by management, as applicable.
• Effort certifications for payroll costs charged to certain federal awards were not completed by personnel as required.
• Sufficient, appropriate documentation supporting compliance with appropriate federal procurement, suspension and debarment requirements could not be provided by management.
• Sufficient, appropriate documentation supporting compliance with reporting requirements could not be provided for certain federal programs.
• Documentation supporting compliance with certain special tests and provision requirements could not be provided by management.
Repeat Finding: No similar findings identified in the prior year.
Recommendation: We recommend that the University evaluates its procedures and internal controls and implement changes to ensure that federal funds are being administered in accordance with federal regulations and that the appropriate documentation supporting its compliance is formally prepared, reviewed and retained.
Views of Responsible Officials and Planned Corrective Actions: University administration recognizes the significant role of internal controls throughout the institution including fiscal, administrative and programmatic operations. The university’s internal control objectives and related risks can be broadly classified into one or more of the following three categories:
• Operations - Effectiveness and efficiency of operations
• Reporting - Reliability of reporting for internal and external use
• Compliance - Compliance with applicable laws and regulations
Based on the institutions internal control objective’s, the Office of Sponsored Program has prepared its internal control plan in a framework which addresses the five components and 17 principles of internal controls as outlined in GAO’s Standard for Internal Controls. Additionally, retention policies have been put in place to ensure all drawdowns are supported by allowable expenditures and the records are maintained in accordance with the standards of the granting agencies. The grants accountant in coordination with the office of sponsored programs manages external grants awards through the creation of internal spending accounts, performs quarterly monitoring of financial activity in Colleague Finance (or more frequently when dictated by reporting requirements), obtains grant payments from sponsors, and creates and submits financial reports. The Office of Sponsored Programs has updated the External Award Policy and Procedures Manual which outlines the process for conducting reconciliations of grants for reporting and yearend processes.
Updated policy and procedures manuals, Internal control policies and retention control policies as it relates to sponsored programs have been established to ensure the reliability and integrity of financial information. The Institutions internal control policy will ensure that management has accurate, timely, and complete information, including accounting records, in order to plan, monitor and report grant awards accurately.