Finding Text
FINDING 2023-006
Information on the federal program:
Federal Agency: Department of Labor
Pass-Through Entity: Indiana Department of Workforce Development
Federal Program: WIOA
Assistance Listing Number: 17.258, 17.259, 17.278
Compliance Requirement: Activities Allowed or Unallowed
Audit Findings: Material Weakness, Internal Controls
Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria:
a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.
b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity.
d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.
f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period.
g) Be adequately documented.
h) Cost must be incurred during the approved budget period.
Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards 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 terms and conditions of the Federal award.
Condition: EmployIndy did not formally review and approve 12 selected WIOA non-payroll expenditures in a sample of 60 to determine that they are allowable under the WIOA federal regulations.
Cause: The condition was caused by a lack of internal controls over WIOA subrecipient/service provider claims for accrued expenditures.
Effect: As a result of these matters, expenditures could be inaccurately charged to the federal grant.
Questioned costs: There are no questioned costs.
Context: During our testing procedures over WIOA disbursements for the activities allowed or unallowed compliance requirement, we identified expenditures that are not formally reviewed by management for allowability under the WIOA grant.
Identification as a repeat finding, if applicable: This is a repeat finding. Appeared as finding 2022-006 in the prior report.
Recommendation: We recommend that management implement a consistent multi-stage review process for expenditures that are to be allocated to the WIOA cluster and that management clearly organize and retain records of purchase to support amounts being listed as expenditures on their SEFA.
Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.