GREATER NEW BEDFORD WORKFORCE INVESTMENT BOARD, INC.

Criteria: Workforce Innovation and Opportunity Act (WIOA) Adult and Dislocated Worker funds must be used at the local level to pay for career and training services through the AJC system for program participants. Other activities allowed include basic career services, individualized career services, and training services. Activities allowed under Youth Activities include tutoring, alternative secondary school services, paid and unpaid work experiences, occupational skill training, leadership development, adult mentoring, follow-up services, financial literacy education, and entrepreneurial skills training. 2 CFR 200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (g) Be adequately documented. See §§ 200.300 through 200.309. 2 CFR 200.303 Internal Controls (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). Condition: Workforce Innovation and Opportunity Act (WIOA) Funds were expended for costs that are not explicitly allowable under the compliance requirements for activities allowed or unallowed including charges for conferences and travel. • Travel and conference expense reimbursements did not establish a clear business purpose or provide other evidence of attendance. Receipts lacked a detailed breakdown of costs charged to the federal award. • Employee reimbursements did not include itemized breakdowns and were not reported on the entity’s Expense Form. • The entity’s policy does not outline the approval requirements for Executive Director expense reimbursements. Cause: Employee expenditures were not reviewed and approved prior to being charged to the federal award program. • The necessary approvals were not obtained prior to incurring costs charged to the federal award program. • The entity’s policy does not explicitly state approvals required for Executive Director expense reimbursements. • Expense Forms were not utilized for employee reimbursements per the entity’s written policy. Effect: Lack of proper approvals and documentation could result in unallowable costs being charged to the federal award, possibly resulting in the entity having to return funds to the federal agency or pass-through entity. This may also lead to reduction of future federal funding due to noncompliance. This also creates an opportunity for fraud to occur. • Unnecessary or unreasonable costs charged to the federal award program. • Possible reduction of future funding or requirement to return funding used for unallowable costs to awarding agency. Questioned Costs: $14,548 Repeat Finding: No Recommendation: We recommend that management review policies over employee travel expenses, conferences, and reimbursements to ensure they align with federal award requirements, are communicated to all employees, and provide necessary training. In addition, we recommend the WIB ensure that all employee reimbursement expenses are reviewed and approved prior to being incurred, approvals are obtained by an appropriate level of management or those charged with governance and are sufficiently documented.

Criteria: 2 CFR 200.303 Internal Controls (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). 2 CFR Section 200.400(a) states “The recipient and subrecipient are responsible for the efficient and effective administration of the Federal award through sound management practices.” Condition: Invoices were not approved for 14 out of 60 (23%) transactions selected for testing. Purchase orders were not included for 5 out of 60 (8%) transactions. 22 out of 60 (37%) of the transactions selected for testing did not have any documentation to support the amounts charged to the federal awards. 5 transactions did not provide detailed receipts to show whether tax was paid. Cause: The entity did not follow procedures which are outlined in the Accounting Manual including the requirement to use purchase orders, obtain Executive Director approval, and retain supporting documentation for all expenses. Effect: Lack of proper approvals and documentation could result in unallowable costs being charged to the federal award, possibly resulting in the entity having to return funds to the federal agency or pass-through entity. This may also lead to reduction of future federal funding due to noncompliance. Questioned Costs: $231,725 Repeat Finding: No Recommendation: We recommend that management review the policies and procedures in place, make any necessary changes, and communicate these to all staff at the WIB.

Criteria: 2 CFR 200.430 Compensation – personal services. (g) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient Condition: • Timesheets were not submitted for 2 out of 18 of the items selected for testing. • 15 out of 18 timesheets were not approved. Cause: • Written policies and procedures outlined in the entity’s employee handbook were not followed. • Management did not ensure proper approvals for timesheets. Effect: • Time incorrectly charged to federal award programs. • Possible reduction of future funding due to noncompliance with federal award program requirements. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the WIB review its timesheet policy to ensure it aligns with federal award requirements, is communicated to employees, and provide necessary training. We also recommend management ensure that a process is in place for proper timesheet approvals.

Criteria: 2 CFR 200.303 Internal Controls (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). 2 CFR 200.329 Monitoring and reporting program performance (a) Monitoring by the recipient and subrecipient. The recipient and subrecipient are responsible for the oversight of the Federal award. The recipient and subrecipient must monitor their activities under Federal awards to ensure they are compliant with all requirements and meeting performance expectations. Monitoring by the recipient and subrecipient must cover each program, function, or activity. See also § 200.332. Condition: • Supporting documentation was not available for 4 out of 8 monitoring reports selected for testing. • None of the monitoring reports selected were approved by a second individual as required by the WIB’s policy. Cause: • Documentation was not retained as required. • Internal controls are not in place over eligibility and monitoring as required by the WIB’s policy. Effect: • Funding may be provided to individuals or entities who are not eligible to receive funding under the federal award programs. • Possible reduction of future funding due to noncompliance with federal award program requirements. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the WIB implement controls and document procedures over eligibility monitoring to ensure compliance with federal award requirements.

Condition: Financial records and supporting documents pertinent to the award were not retained in accordance with 2 CFR 200.333 Retention requirements for records. Criteria: Per 2 CFR 200.333 Retention requirements for records: ?Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report.? Per Section 185 Reports; Recordkeeping; Investigations: ?(1) In General ? Recipients of funds under this title shall keep records that are sufficient to permit the preparation of reports required by this title and to permit the tracing of funds to a level of expenditure adequate to ensure that the funds have not been spent unlawfully.? Cause: It was noted, during testing compliance over allowable costs, that the WIB did not retain sufficient documentation to support several transactions selected for testing. Effect: Noncompliance with Federal record retention regulations (2 CFR 200.333), lack of proof of payments to vendors which can lead to the inability to reconcile subledgers or provide sufficient documentation to awarding agencies. Isolated Instance or Systemic Problem: We consider this to be a ?systemic? problem. Repeat of Finding in the Immediately Prior Audit: No. Recommendations to Prevent Future Occurrence: We recommend that the WIB maintain all pertinent documentation in order to support costs charged to the Federal award to maintain compliance with Federal regulation.

Condition: The WIB did not submit accurate quarterly financial reports (Financial Status Reports or FSR?s) as required by the Uniform Guidance or 2 CFR 200.327 Financial reporting, and WIOA Section 185 Reporting regulations. Criteria: Per Section 185 Reports; Recordkeeping; Investigations: ?(3) Maintenance of Standardized Records. ? In order to allow for the preparation of the reports required under subsection (c), such recipients shall maintain standardized records for all individual participants and provide to the Secretary a sufficient number of such records to provide for an adequate analysis of the records.? Cause: It was noted, during testing of compliance over reporting, that the WIB did submit accurate quarterly reports to the pass-through entity. Effect: Noncompliance with Federal reporting regulations and WIOA Regulations and submitting inaccurate expenditures may result in the inability to adequately analyze records and may also lead to excess or insufficient funds reimbursed by the awarding agency. Isolated Instance or Systemic Problem: We consider this to be a ?systemic? problem. Repeat of Finding in the Immediately Prior Audit: No. Recommendations to Prevent Future Occurrence: We recommend that the WIB implement controls over reporting to ensure accuracy in reporting Federal funds budgeted and expended.

Condition: The WIB did not submit an Indirect Cost Rate Proposal as required per 2 CFR 200 Appendix VII (D) Indirect Cost Proposals - Submission and Documentation of Proposals. Criteria: Per 2 CFR 200 Appendix VII Indirect Cost Proposals ? Submission and Documentation of Proposals: ?All Departments or agencies of a governmental unit claiming indirect costs under federal awards must prepare an ICRP and related documentation to support those costs.? Per review of correspondence from the Commonwealth of Massachusetts (pass-through entity) and documentation, we noted that an Indirect Cost Rate Proposal was required to be submitted in FY20. Cause: The WIB failed to submit the required proposal. Effect: (1) Noncompliance with the pass-through entity may result in a reduction of funding; and (2) Indirect cost allocations may be calculated incorrectly which may result in an improper allocation of funds, potentially reducing funds that should be used for costs that directly benefit participants of the program(s). Isolated Instance or Systemic Problem: We consider this to be a ?systemic? problem, as it was identified across the entire cluster. Repeat of Finding in the Immediately Prior Audit: No. Recommendations to Prevent Future Occurrence: We recommend that the WIB implement controls and procedures over the grant management process including reviews and approvals of all required submissions to granting agencies.