YWCA METROPOLITAN CHICAGO

Assistance Listing Number, Federal Agency, and Program Name - 10.558, U.S. Department of Agriculture, Child Care and Adult Food Program Federal Award Identification Number and Year - 15-016-271P-00, 2024 and 2023 Pass through Entity - Illinois State Board of Education Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2023-005 Criteria - Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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). Other requirements include the following: (a) Per 7 CFR 226.15(f), each sponsoring organization of day care homes shall determine which of the day care homes under its sponsorship are eligible as tier I day care homes. (b) As required under 7 CFR 226.16(d)(4)(iii), sponsoring organizations are required to perform on site monitoring of each of its facilities three times every year, which includes requirements to ensure the amount of time between reviews does not exceed six months (unless review average is used). Condition - There was a lack of documented controls as evidence of supervisory review and segregation of duties to ensure compliance with federal program requirements, specifically over the following: a) Tier (day care home eligibility) determinations b) Subrecipient monitoring Noncompliance was identified for subrecipient monitoring as noted in the context below. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - No instances of noncompliance result in questioned costs. Context (a) While gaining an understanding of controls over tier (day care home eligibility) determinations, we noted no controls established to ensure supervisory review of these determinations. (b) While testing a sample of 56 provider monitoring visits, we noted 35 day care homes and 1 day care center with less than the required 3 annual on site monitoring visits for the year and 40 day care homes for which time between on site monitoring visits exceeded six months. Cause and Effect - A lack of effectively designed, implemented, and operating controls in any of these areas could result in future material noncompliance with program requirements or the Uniform Guidance in the future. The deficiency in operating controls for subrecipient monitoring resulted in noncompliance for fiscal year 2024. Recommendation - We recommend management formalize documentation of a supervisory review of the following: (a) Data used in making tier/eligibility determinations for accuracy and completeness (b) Subrecipient monitoring Views of Responsible Officials and Corrective Action Plan - Management agrees with the recommendations and plans the following: (a) Management is working with the Software company staff to develop software based evidence of second review. If this is not possible, a tracking mechanism external to the software will be developed by March 2025. (b) Under management’s supervision, monitoring visits are being brought current on the contract currently in place and will be completed as required by end of the contract. A tracking mechanism has been put in place to ensure compliance with the required number of monitoring visits and timeliness.

Assistance Listing, Federal Agency, and Program Name 10.558, U.S. Department of Agriculture, Child Care and Adult Food Program Federal Award Identification Number and Year 15 016 271P 00 Pass through Entity Illinois State Board of Education Finding Type Material weakness Repeat Finding No Criteria Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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). Other requirements include: a) Per 7 CFR 226.10(c)(1), prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must perform edit checks on each facility's meal claim; per 7 CFR sections 226.16(g) and (h), a sponsoring organization must disburse advance and meal reimbursement payments to centers and day care homes under its sponsorship within five working days of receiving them from its state agency. b) Per 7 CFR 226.15(f), each sponsoring organization of day care homes shall determine which of the day care homes under its sponsorship are eligible as tier I day care homes. c) Communication from the passthrough entity to return to pre COVID 19 monitoring, as required under 7 CFR 226.16(d)(4)(iii), effective October 1, 2022, where sponsoring organizations are required to perform onsite monitoring of each of its facilities three times every year, which includes requirements to ensure the amount of time between reviews does not exceed six months (unless review average is used). Condition A lack of documented controls as evidence of supervisory review and segregation of duties to ensure compliance with Federal program requirements, specifically over: a) monthly expenditure reports submitted to the passthrough entity b) tier (day care home eligibility) determinations c) subrecipient monitoring Questioned Costs None Identification of How Questioned Costs Were Computed N/A no instances of material noncompliance noted that would result in questioned costs Context a) During testing a sample of 5 monthly expenditure submissions, we noted no formally documented supervisory review in place. Additionally, during testing of 40 disbursements to providers, we noted no formally documented supervisory review to ensure disbursements to providers are made within 5 working days of receipt from the State passthrough entity. b) While gaining an understanding of controls over tier (day care home eligibility) determinations, we noted no controls established to ensure supervisory review of these determinations. c) While testing a sample 40 provider monitoring visits, we noted 3 visits without evidence of supervisory review and 6 visits where the visit was completed and validated in the software by the same individual. Additionally, we noted 16 day care homes and 2 day care centers with less than the required 3 annual on site monitoring visits for the year, and 15 day care homes and 2 day care centers where onsite monitoring performed were more than the required 6 months apart. Cause and Effect A lack of effectively designed, implemented, and operating controls in any of these area could result in a material noncompliance with program requirements or Uniform Guidance. Recommendation We recommend management formalize documentation of a supervisory review of: a) monthly expenditure submissions before submitting to the passthrough entity, including documented supervisory controls to ensure disbursement timeliness is met within 5 working days as part of this review; b) of data used in making tier/eligibility determinations for accuracy and completeness; and c) of subrecipient monitoring. Additionally, we recommend management work with its passthrough entities to cofirm compliance requirements, especially when compliance requirements change as the result of ending or expiring waivers and flexibilities. Views of Responsible Officials and Corrective Action Plan Management agrees with the recommendations. a) Management will put into place a formal procedure to support evidence of the second review over the monthly expenditure submissions taking place by April 2024. Management also notes that there are no instances in which the Organization did not provide funds to the provider within the mandated 5 days, however, the Organization will begin formally documenting the process of review over provider payments within 5 days by April 30, 2024. b) The software required to be used by the funder for management of the program does have limitations on how the data input for making tier/eligibility determinations and necessary second review is documented. The Organization will design a process to document this second review by April 30, 2024. c) Management believes staffing shortages coming out the COVID 19 waivers resulted in the inability to perform all required Subrecipient monitoring, however, this staffing shortage has been rectified as of August 31, 2023.

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