The Children's Aid Society

Finding 2021-001 Evaluation of federal compliance requirements when receiving subawards (Significant Deficiency) U.S. Department of Health and Human Services Community Services Block Grant (Federal Assistance Listing #93.569) Federal Award Numbers: 766623A, 31215B766624A, 831109B, 831108B, 831215B, 831012B, 124502C, 134305C, and 126156A Federal Award Year: 2020-2021 Criteria: As a subrecipient of Community Services Block Grant awards from the New York City Department of Youth and Community Development (?NYC DYCD?) Children?s Aid Society management evaluated their grant agreement with DYCD to evaluate the nature of the program and their compliance with the grant requirements. However, two federal requirements for U.S. Department of Health and Human Services listed in the 2021 Compliance Supplement were not evaluated and addressed during the year ended June 30, 2021 being audited as follows: 1) Special Tests and Provisions - Tri-Partite Board Compliance The CSBG Act at 42 USC 9910(a), requires nonprofit organizations administer CSBG through a board comprising: ? One-third (1/3) of the members be elected representatives in the community or their designee (the elected official must be holding office on the date of selection). There is a provision that allows for appointed government officials, or their designee, to be counted in meeting this requirement. ? Not fewer than one-third (1/3) of the board members are chosen in a democratic selection process adequate to assure that these members of the board are representative of the low-income individuals and families served. Additionally, each low-income representative must reside in the neighborhood served. 2) Eligible entities or other subrecipients of Community Services Block Grants (?CSBG?) are required to ensure funds are only extended to support eligible participants. The official poverty guidelines as revised annually by HHS shall be used to determine eligibility. The poverty guidelines are issued each year in the Federal Register and on the HHS website (http://aspe.hhs.gov/poverty/). The CSBG Act, at 42 USC 9902(2), grants the state the authority to adopt a revised poverty threshold but it may not exceed 200 percent of the HHS-determined poverty guidelines during 2020 and 2021 as revised under the CARES Act. Condition and Context: Management has indicated their board does not comply with the Tri-Partite board requirement as they receive their CSBG as a pass through from NYC DYCD and this requirement has not been discussed or noted in their pass through grant. In addition management noted their grant agreement requires their enrollment of students in the learning labs funded by the federal CSBG based on the enrollment rosters received from the New York City Department of Youth and Community Development as they were the entity that granted the CSBG funds to Children?s Aid Society as a subrecipient and this eligibility requirement has not been discussed or noted in their pass through grant. In addition management noted the increase in CSBG funding as a COVID-19 pandemic response and need for NYC DYCD to set up these programs during the pandemic created a condition where their focus was on complying with the subaward grant requirements to implement this pandemic response program quickly and NYC DYCD designed and implemented the enrollment of students in the learning lab program. Cause: As there is no evaluation of the federal compliance supplement requirements at the time the subaward is received specific federal compliance requirements that are not indicated in the subaward grant agreement may be applicable. By not performing a review of these federal requirements management was not aware of the Tri- Partite board requirement or enrollment eligibility requirements but deferred to the terms of the subaward grant agreement. Effect: The CSBG expenditures are not being administered by a Tri-Partite board as required by the CSBG Act and the CSBG expenditures are not being monitored by NYC DYCD or Children?s Aid Society to ensure only eligible participants receive support from the CSBG expenditures. However, given the terms of the subaward grant agreement Children?s Aid Society enrolled the students they were required by the grant to enroll for which the NYC DYCD was responsible for enrollment. Questioned Costs: None identified. Recommendation: Upon entering into subaward grant agreements management should evaluate all direct and material federal compliance requirements to ensure controls are designed for the required compliance. In addition, the CSBG expenditures should be administered by a Tri-Partite board as required by the CSBG Act and the participants in any programs funded by CSBG expenditures should be evaluated before enrollment to ensure they meet the eligibility requirements of the federal government for used of CSBG funds or verification that the sub awarding entity has performed such eligibility requirements should be obtained. Views of Responsible Officials: See management?s corrective action plan attached at the end of this report.

CORRECTIVE ACTION PLAN Finding 2021-001 Evaluation of federal compliance requirements when receiving sub awards (Significant Deficiency) U.S. Department of Health and Human Services Community Services Block Grant (Federal Assistance Listing #93.569) Federal Award Number:766623A, 31215B766624A,831109B,831108B,831215B,831012B,124502C134305C,126156A Federal Award Year: 2020-2021 Responsible Officials Contact Information: Michael Greenberg Chief Financial Officer 212-949-5002 mgreenberg@childrensaidnyc.org Jason Rok Deputy Chief Financial Officer 212-949-4401 jrok@childrensaidnyc.org View of Responsible Officials and Corrective Action Plan: Management acknowledges that it did not establish a separate Tri-Partite board. However, as a subrecipient of the Community Services Block Grant (CSBG), Management relied on the terms of its contract with New York City Department of Youth and Community Development (NYC DYCD) and complied with the terms of the subgrant. Management believes that the broad representation among the 26 trustees comprising its current Board of Directors, including representatives from the Federal Head Start program, is sufficient to oversee the programmatic activities of the communities being served. Management won?t be taking any corrective actions. Management also acknowledges that some the participants receiving services exceeded the Community Services Block Grant (CSBG) poverty threshold. However, during the COVID pandemic, the New York City Department of Youth and Community Development (NYC DYCD) made provisions to serve the children of first responders and other critical workers. Children?s Aid was compelled by NYC DYCD to intake the children of first responders in the childcare program during portion of the COVID pandemic, and not permitted to exclude participants based upon 2x to 3x poverty level incomes. These participants were screen by NYC DYCD and referred to Children?s Aid to serve them. Management won?t be taking any corrective actions.