CITY OF HOLYOKE

Criteria: If the applicable de minimis rate for indirect cost is elected, the Department must apply such rate to modified total direct costs (MTDC), which exclude capital expenditures, construction, and other unallowable base costs per requirements prescribed by 2 C.F.R. §200.414(f). Condition/Context: During testing of federal grant expenditures and related reporting, it was noted that the Department calculated indirect costs using an incorrect total direct cost base rather than the modified total direct costs required by the grant agreement and 2 C.F.R. §200.414(f). Indirect cost was calculated based on total cost, including construction and material. Testing covered 100% of the population therefore the sampling basis is not applicable. Cause: The condition was caused by management’s misunderstanding of the federal indirect cost requirements applicable to the grant. Specifically, the requirement to apply the de minimis indirect cost rate to modified total direct costs rather than total project expenditures was unclear. Contributing factors included the entity’s limited prior experience administering major federal grants, reliance on the grant application budget that referenced approximately $10 million of expenditures, including up to $900,000 in indirect cost, and delayed clarification from the cognizant agency regarding the appropriate indirect cost base. Effect: The condition resulted in inaccurate SF-425 and SF-271 filings. However, the granting agency limited reimbursements to allowable amounts and no questioned costs were ultimately incurred. The deficiency increased the risk of noncompliance with federal grant requirements, inaccurate financial reporting, and potential delays or disputes related to reimbursement requests. Questioned Costs: None. Recommendation: We recommend the Department implement additional controls surrounding the performance and reporting around federal grant activity. We also recommend that the Department implements a formal written policy that administers all activities related to federal grants. Views of Responsible Officials: The incorrect calculation of indirect costs resulted from a misunderstanding of the federal requirements applicable to this grant. HG&E had initially confirmed its methodology verbally with the cognizant agency during bi-weekly check-in meetings, during which we were advised that our approach was correct - likely influenced by the fact that this was a new grant program. Additional contributing factors included our reliance on the grant application budget approved by the cognizant agency, which referenced approximately $10 million in total expenditures, including up to $900,000 in indirect costs. Furthermore, delayed written clarification from the granting agency led to the improper reporting of indirect costs on SF-425 reports. Going forward, HG&E will implement a formal grant administration policy. In addition, HG&E will ensure that all questions related to indirect costs and other compliance requirements are confirmed in writing. We believe this approach will significantly reduce the risk of future errors in reporting.

2021-005 Improve Controls Over Student Enrollment Classifications Federal Agency: U.S. Department of Education Cluster/Program: Title I CFDA Number(s): 84.010 Award Year: 2021 Compliance Requirement: Special Tests Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement The City must report graduation rate data for all public high schools using the 4-year adjusted cohort rate under 34 CFR section 200.19(b)(1)(i)-(iv)). To remove a student from the cohort, the City must confirm in writing that the student transferred out, emigrated to another country, or is deceased. To confirm that a student transferred out, the City must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Condition and Context As also noted in the prior year, in testing controls over, and compliance related to student enrollment classifications required under the Title I program, we found that the City was unable to provide official written documentation to support the withdrawal of a student from the school system for seven of the seventeen students selected for testing. Cause The City has not established adequate procedures to ensure compliance with the provisions of this Federal requirement. Effect There are no questioned costs as a result of this finding as there are no costs directly associated with this compliance requirement. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2020-007. Recommendation We recommend the City modify procedures to ensure that all required documentation to support the withdrawal of a student from the school system be retained. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included in the separate corrective action plan report.

2020-006 Maintain Adequate Time and Effort Documentation and Documentation of Pay Rates Federal Agency: U.S. Department of Education Cluster/Program: Title I & Special Education Cluster Award Name: CFDA Number(s): 84.010 & 84.027/84.173 Award Year: 2020 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement Federal grant recipients are required to maintain Federally compliant documentation to support time and effort of employees working solely or partially on Federal grants. These records must be maintained in accordance with Federal cost principles (Uniform Guidance), and must, in some documented fashion, provide evidence that the time charged to Federal programs represents the time actually spent on that grant function by the employee. For employees who work partially on grant activities, time logs can be prepared and must be signed by either the employee or a supervisor knowledgeable of the work performed by the employee. For employees who work solely on grant activities, semi-annual certifications can be prepared and also must be signed by either the employee or a supervisor knowledgeable of the work performed by the employee. Condition and Context During testing of time and effort documentation related to the employees charged to the Title I and Special Education grants, we found that semi-annual certifications were prepared for all fourteen employees tested for fiscal year 2020, however, they were both signed in January 2021. Certifications should be prepared and approved on a semi-annually basis. In addition, during our testing of payroll transactions charged to the Title I grant we noted three instances where the School Department was unable to provide us with documentation to support rates of pay for employees who were considered off-step. Since documented rates of pay are not easily accessible, there is an increased risk of errors or irregularities occurring and going undetected. Cause The City has not established adequate procedures to ensure compliance with the provisions of applicable Federal cost principles. Effect Due to the issues noted above, known questioned costs are reported as $196,653. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a modification and repeat of finding 2019-007. Recommendation We recommend the City amend their processes and documentation to comply with time and effort requirements in accordance with applicable Federal guidelines. We also recommend the School Department create an employee payroll status form in order to document employee rates of pay, the reasons for payroll changes, and approval by an appropriate official, such as the Superintendent or Business Manager. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included in the separate corrective action plan report.

2020-007 Improve Controls Over Student Enrollment Classifications Federal Agency: U.S. Department of Education Cluster/Program: Title I Award Name: CFDA Number(s): 84.010 Award Year: 2020 Compliance Requirement: Special Tests Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement The City must report graduation rate data for all public high schools using the 4-year adjusted cohort rate under 34 CFR section 200.19(b)(1)(i)-(iv)). To remove a student from the cohort, the City must confirm in writing that the student transferred out, emigrated to another country, or is deceased. To confirm that a student transferred out, the City must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Condition and Context As also noted in the prior year, in testing controls over, and compliance related to student enrollment classifications required under the Title I program, we found that the City was unable to provide official written documentation to support the withdrawal of a student from the school system for six of the seventeen students selected for testing. Cause The City has not established adequate procedures to ensure compliance with the provisions of this Federal requirement. Effect There are no questioned costs as a result of this finding as there are no costs directly associated with this compliance requirement. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2019-008. Recommendation We recommend the City modify procedures to ensure that all required documentation to support the withdrawal of a student from the school system be retained. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included in the separate corrective action plan report.

2019-007 Maintain Adequate Time and Effort Documentation Federal Agency: U.S. Department of Education Cluster/Program: Title I Award Name: CFDA Number(s): 84.010 Award Year: 2019 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement Federal grant recipients are required to maintain Federally compliant documentation to support time and effort of employees working solely or partially on Federal grants. These records must be maintained in accordance with Federal cost principles (Uniform Guidance), and must, in some documented fashion, provide evidence that the time charged to Federal programs represents the time actually spent on that grant function by the employee. For employees who work partially on grant activities, time logs can be prepared and must be signed by either the employee or a supervisor knowledgeable of the work performed by the employee. For employees who work solely on grant activities, semi-annual certifications can be prepared and also must be signed by either the employee or a supervisor knowledgeable of the work performed by the employee. Condition and Context During testing of time and effort documentation related to the employees charged to the Title I grant, we noted the following issues: ? There were instances where certifications were only done once during the year and instances where certifications were not done at all. Certifications should be completed semi-annually. ? There were instances where only a portion of an employee?s salary was charged to the grant but time logs were not maintained to support the time worked on the grant. Cause The City has not established adequate procedures to ensure compliance with the provisions of applicable Federal cost principles. Effect Due to the issues noted above, known questioned costs are reported as $74,669. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2018-006. Recommendation We recommend the City amend their processes and documentation to comply with time and effort requirements in accordance with applicable Federal guidelines. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included in the separate corrective action plan report.

2019-008 Improve Controls Over Student Enrollment Classifications Federal Agency: U.S. Department of Education Cluster/Program: Title I Award Name: CFDA Number(s): 84.010 Award Year: 2019 Compliance Requirement: Special Tests Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement The City must report graduation rate data for all public high schools using the 4-year adjusted cohort rate under 34 CFR section 200.19(b)(1)(i)-(iv)). To remove a student from the cohort, the City must confirm in writing that the student transferred out, emigrated to another country, or is deceased. To confirm that a student transferred out, the City must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Condition and Context As also noted in the prior year, in testing controls over, and compliance related to student enrollment classifications required under the Title I program, we found that the City was unable to provide official written documentation to support the withdrawal of a student from the school system for sixteen of the seventeen students selected for testing. Cause The City has not established adequate procedures to ensure compliance with the provisions of this Federal requirement. Effect There are no questioned costs as a result of this finding as there are no costs directly associated with this compliance requirement. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2018-007. Recommendation We recommend the City modify procedures to ensure that all required documentation to support the withdrawal of a student from the school system be retained. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included in the separate corrective action plan report.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION