Knox County GovernmentLocal Government

IDEA Equipment Management Program - Special Education Cluster (IDEA), Assistance Listing Numbers 84.027A, 84.173A. Criteria or Specific Requirement - Federal regulations outlined in 2 CFR 200.313 and the Compliance Supplement, as amended by the State of Tennessee Department of Education, require that equipment purchases in excess of $5,000 (or more than $100 if the item is considered sensitive minor equipment) be properly accounted for and tracked by the entity if funded by Federal grants. Specifically, property records must be maintained that includes a description of the property, a serial number or other identification number, the acquisition date, cost of the property, the location, use and condition of the property, and any ultimate disposition of the property. Condition - During our single audit testing, we noted various instances where School equipment was not being tracked properly. Issues included equipment not being entered into the system with a correct value, not receiving an asset tag, or not being tracked accurately as to its location. Cause and Effect - The issue resulted from inconsistent execution and monitoring of existing equipment inventory procedures, which affected the completeness and accuracy of information recorded in the equipment management system. The effect was immaterial noncompliance with equipment management required under Uniform Guidance. Questioned Costs - None Context - We tested 40 current year property acquisitions during our audit. In that sample size, seven were not recorded accurately as to cost due to shipping or discounts. In addition, one item did not have an asset tag or serial number listed. We also selected 50 inventory items to test. Of these selections, 16 items were in a different location than where the system said they were supposed to be and not able to be counted or not able to be counted. Recommendations - The Schools need to strengthen oversight and monitoring to ensure existing inventory procedures for IDEA funded equipment are fully and consistently followed. Management’s Response - We concur. Oversight and monitoring will be strengthened by undertaking a new inventory and a departmental restructure for improving management of items purchased with Federal IDEA grant funds.

2023-007 Emergency Rental Assistance Payments Based on Fraudulent Applications Submitted to the Program Program(s): Emergency Rental Assistance Program (AL# 21.023) Criteria or Specific Requirement - Uniform Guidance requires that program expenditures be allowable based on program legislation, federal awarding agency regulations, and/or the terms and conditions of the award. Condition and Context - During the course of our audit, program management made us aware that payments were issued from the Emergency Rental Assistance Program to internal personnel who created and approved fraudulent applications to the program. This situation was discovered by the Community Development Office through a review of end of period reports. Cause and Effect - Internal personnel colluded together to create and approve fraudulent applications to the program. These payments were set up to be paid directly to the internal personnel themselves or those related to them. Questioned Costs and Prevalence - An investigation is currently ongoing, but management believes that fraudulent disbursements to be approximately $154,500. Management has not identified any additional fraudulent payments related to this issue. Recommendations - We recommend that management establish a process to identify payments which contain known information of internal personnel to determine eligibility prior to issuing future payments. Management’s Response - We concur with the recommendations and have implemented a process to identify any payment requests connected to internal personnel and escalate these requests for director approval prior to payment being issued.

2022-004 Emergency Rental Assistance Payments Based on Fraudulent Applications Submitted to the Program Program(s): Emergency Rental Assistance Program (AL# 21.023) Criteria or Specific Requirement - Uniform Guidance requires that program expenditures be allowable based on program legislation, federal awarding agency regulations, and/or the terms and conditions of the award. Condition and Context - During the course of our audit, program management made us aware that payments were issued from the Emergency Rental Assistance Program to an applicant who submitted fraudulent applications to the program. This situation was discovered by the Community Development Office through a whistleblower. Cause and Effect - Due to the nature of the Emergency Rental Assistance Program, applicants are able to self-certify that they meet a large portion of the program?s eligibility requirements. The applicant falsified documentation to appear eligible to receive funding from the program. Program management had established adequate internal controls over the program and properly processed the application under the guidance of the Federal Program. However, self-certification makes it difficult to detect fraudulent applications. The result was the program made unallowable payments. Questioned Costs and Prevalence - An investigation is currently ongoing, but management believes that fraudulent disbursements to the applicant are between $25,000 and $160,000. Management has not identified any additional fraudulent payments and believes this to be an isolated incident. Recommendations - We recommend that management establish a process to identify applicants who have received a high level of funding from the program and determine their reasonableness prior to issuing future payments. Management?s Response - We concur with the recommendations and have implemented additional steps in the fraud prevention procedures previously implemented for this program.

Requests for Reimbursement - Health Department Program(s) - Special Supplemental Nutrition Program for Women, Infants, and Children (CFDA # 10.557) and HIV Care Formula Grants (CFDA # 93.917) Criteria or Specific Requirement - Good internal control procedures over compliance should include procedures whereby the requests for reimbursement related to federal grant awards submitted to the pass-through entity or Federal agency should be reviewed by a management level individual, and the review process documented. Condition and Context - During our audit, we noted that the monthly requests for reimbursements for the WIC and HIV Formula Grant programs were prepared by the finance director of the Knox County Health Department and submitted electronically to the State of Tennessee for payment without review or approval by the respective program director. Cause and Effect - By not performing a review of reimbursement request reports, there is a weakness in internal control over compliance for reporting which can lead to errors. In addition, a management level review and approval of this process can help prevent and detect possible fraud. Recommendations - We recommend that requests for reimbursement for federal grant awards be reviewed and approved by the respective program director or designee before being submitted to the pass-through entity or federal agency. The reviewer should document evidence of their review. Management?s Response - We concur with this recommendation. The Knox County Health Department will implement a policy requiring dual review and signatures by the Program Manager and Knox County Health Department Finance on requests for reimbursement for all grant awards.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION