Type of Finding: Material Weakness in Internal Control over Compliance
Pass-Through Agency: Pacific Mountain Workforce Development, King County Regional Homelessness Authority, City of Bellevue, King County, City of Des Moines, United States Conference of Catholic Bishops
Pass-Through Number(s): TCJN-ARPA-011-PY21, DA-202201-00320, DA-202212-01125, DA-230, 10270, 6204070, DA-251, SLFRP4086, 20-WA-146, 20-WA-146LT, S20-WA-500, 90ZU0386-3-0, 90ZU0386-3-0
Award Period: May 1, 2022 to June 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2024, January 1, 2022 to December 31, 2024, January 1, 2022 to December 31, 2022, September 1, 2021 to August 31, 2022, October 1, 2020 to September 30, 2023, August 19, 2022 to September 30, 2026, October 1, 2019 to September 30, 2023, January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023
Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity 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 the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)". In addition, 2 CFR 200.329(c)(1) states that the non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity.
Condition: During testing of indirect costs, cash management, and reporting, it was noted that documentation was not retained secondary review of financial reports, performance reports, or special reports. In addition, during testing of reporting, it was noted that some reports were not filed timely and reported some incorrect demographics.
Questioned costs: None.
Context: (21.027) For allowable costs (indirects), a sample of 8 was made from a population of 63 reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 16 monthly, quarterly, and annual reports (varied) was made from a population of 91 total reports. Of the 16 sampled, 15 were missing evidence of authorized personnel review. In addition, 1 monthly performance report was not filed timely. (64.033) For allowable costs (indirects) and cash management, a sample of 8 was made from a population of 35
reimbursement requests for the major program. Of the 8 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 11 monthly, quarterly, and annual reports (varied) was made from a population of 40 total reports. Of the 11 sampled, all were missing evidence of authorized personnel review. In addition, 2 quarterly performance reports reported some incorrect demographics. (93.676) For allowable costs (indirects) and cash management, a sample of 3 was made from a population of 12 reimbursement requests for the major program. Of the 3 sampled, all were missing evidence of authorized personnel review. For reporting, a sample of 5 monthly and quarterly reports (varied) was made from a population of 16 total reports. Of the 5 sampled, all were missing evidence of authorized personnel review. In addition, 1 quarterly performance report was not filed timely and reported some incorrect demographics.
Cause: Documentation is not retained as proof of authorized personnel review on monthly, quarterly, and annual financial, performance and special reports. For late filing, controls are not in place to ensure that timely report filings are made in the event that an employee responsible for report submission is out of office during the due date.
Effect: Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, CCS could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that CCS is entitled to under the terms of the grant. Inadequate allocation of indirect costs to federal programs may result in noncompliance with grant regulations, which could result in penalties or repayment obligations. The late filing of reports can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities’ ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner.
Repeat Finding: No.
Recommendation: CLA recommends that documentation is retained as proof of authorized personnel review. In addition, CCS should consider backup measures to ensure the timely filing of financial, performance and special reports even during the absence of an employee.
Views of responsible officials: There is no disagreement with the audit finding.