ST.PETER-ST.JOSEPH CHILDEREN'S HOMENon-Profit

2020-002 ? Cash Management Program Title: Unaccompanied Alien Children CFDA: #93.676 Contract Grant Number: 90ZU0198-03-03 and 90ZU0342-01-00 Federal Agency: U.S. Department of Health and Human Services Pass-through Entity: Office of Refugee Resettlement Type of Finding: Significant Deficiency Criteria: 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition: The Home?s monthly invoice package contains a ?Statement of Activities Report? generated by the Program Accountant to determine the amount of funds to be drawn from the Payment Management System (PMS). The Program Accountant will also perform an individual calculation of indirect costs based on these expense reports and the federally approved rate for indirect costs. The Director of Finance reviews this information prior to finalization. Total funds requested through PMS are based on the calculated amounts in the Statements of Activities. Although we noted that e-mail approvals were provided by the Director of Finance for 2 drawdowns, the control was not operating effectively to detect and correct errors in the monthly billings and ensure that costs were properly calculated and requested. As noted in Finding 2020-001, the Home withdrew $65,248 of charges to the ORR grant in excess of incurred expenditures. Cause: Lack of proper review of accuracy of information reported. Effect or Potential Effect: The Home?s internal control process related to the Director of Finance?s review and approval of the draw-down request package were not operating effectively to detect and correct errors in the monthly draw requests. Questioned Costs: The Statement of Activities (generated for the ORR Grant) reported $65,248 in overcharges to the grant throughout the year. After auditor requested to receive a reconciled SEFA during audit fieldwork, the Home identified these overcharges and accrued the amount as of June 30, 2020 for repayment subsequent to year-end. Recommendation: We recommend the Home strengthen its internal controls over the Director of Finance?s review and approval of the reimbursement package, including formal documentation and sign-off of the review process. To strengthen its internal controls, we recommend that the Home implement a process to setup the reviewer (Director of Finance) as the requestor of the PMS drawdown. The Director of Finance can provide written approval for the invoice and supporting documentation to be posted in the Home?s accounting software by the Program Accountant after review is performed; however, the drawdown process should be completed within PMS by the reviewer. This will help ensure that the Program Accountant does not have access to perform a draw request prior to a second level review. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

2020-003 ? Procurement Program Title: Unaccompanied Alien Children CFDA: #93.676 Contract Grant Number: 90ZU0198-03-03 and 90ZU0342-01-00 Federal Agency: U.S. Department of Health and Human Services Pass-through Entity: Office of Refugee Resettlement Type of Finding: Significant Deficiency / Noncompliance Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements. The Home has a documented and approved a procurement policy which conforms to the applicable procurement requirements identified in 2 CFR Part 200 of the Uniform Guidance and establishes federal procurement thresholds and methods. The Home?s federal procurement policy requires the Small/Informal Procurement Method to be followed for purchases less than $50,000. Condition: The Home purchased VoIP phones and accessories and 25 HP laptops during the fiscal year. Total invoice costs for each purchase were less than $50,000 and the Home was required to comply with the Small/Informal Procurement Method. We noted that prior written approval for these purchases was not obtained from the Archdiocese of San Antonio although the approval requirement is explicitly stated in the procurement policy in place during the fiscal year. In addition, documentation of records to show the selection of vendor and reasons for the selection were not formally documented by the Program Director, as required by the Small/Informal Procurement method procedures. Cause: Internal controls did not ensure that the requirements of the Home?s procurement policy were followed. Effect or Potential Effect: Noncompliance over federal procurement requirements could impact current or future funding. Further, the absence of written documentation could result in a lack of evidence to ensure that procurement was made with fair and open competition. Questioned Costs: There are no questioned costs associated with this finding. Repeat Finding: No. Recommendation: We recommend the Home review and enforce procurement procedures to be followed by staff in order to ensure compliance with procurement policies and the Uniform Guidance. The policy must explicitly state any exceptions to the procurement procedures. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

2019-002? Indirect Cost Rates Type of Finding: Material Weakness / Noncompliance CFDA #93.676: 90ZU01198-02-00 and 90ZU0198-03-00 Office of Refugee and Resettlement- Unaccompanied Alien Children Criteria: 2 CFR Section 200.414 (c)(1) of the Uniform Guidance requires that the negotiated rates must be accepted by all Federal awarding agencies. A Federal awarding agency may use a rate different from the negotiated rate for a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification. The Home received approval for three indirect cost rates by the Home?s federal cognizant agency during fiscal year 2019 (9.7% provisional through August 2018, 13.7% provisional through April 2019, and 9.5% provisional through June 2021). Condition: During our recalculation of indirect costs for the Office of Refugee and Resettlement (ORR) Grant contracts, we noted that the Home was not using the most recent indirect cost rate received for billing subsequent to the month after receipt and was not submitting budget modifications to ORR for updated indirect cost rates. Specifically, the indirect cost reimbursements were billed with the incorrect rates in July and August 2018, and April through June 2019. Cause: The monthly draw-down invoices were not reviewed against the most current approved rates to determine that the proper indirect costs were being billed. The Home failed to submit a budget modification to ORR to reflect the updated indirect cost rate that was in effect as of the beginning of the 2018 fiscal year. Effect or Potential Effect: The Home failed to submit budget modifications to ORR to reflect the updated indirect cost rates that was in effect during the period of July ? August 2018 and April ? June 2019. Use of the incorrect indirect cost rates resulted in over charges to the federal agency. Questioned Costs: The Home withdrew an additional $36,516 of indirect costs in excess of the approved rates for the periods listed above. Repeating Finding: This is a repeat finding from the prior year audit (Finding 2018-001). Recommendation: We recommend that the Home submit timely budget modifications to ORR for any updated indirect cost rates. Management must ensure that all documentation for reimbursement be reviewed by an individual other than the creator of the draw-down invoice to ensure that proper rates are billed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

2019-003? Allowable Depreciation Type of Finding: Significant Deficiency / Noncompliance CFDA #93.676: 90ZU01198-02-00 and 90ZU0198-03-00 Office of Refugee and Resettlement- Unaccompanied Alien Children Criteria: 2 CFR Section 200.436 (a) of the Uniform Guidance states that a non-Federal entity may be compensated for the use of its buildings, capital improvements, equipment, and software projects capitalized in accordance with GAAP, provided that they are used, needed in the non-Federal entity's activities, and properly allocated to Federal awards. Such compensation must be made by computing depreciation. Condition: The Home withdrew an additional $33,303 of depreciation costs for assets allocated to the ORR grant. Cause: We noted that the Home did not perform computations of monthly depreciation for assets allocated to federal awards. The Home did not have an adequate monthly close process in place and did not perform timely reconciliation of its fixed asset ledger to ensure that monthly depreciation was properly allocated to the ORR grant. Effect or Potential Effect: Lack of timely reconciliation and accurate depreciation calculations for assets allocated to federal awards could potentially result in noncompliance of allowable costs. Questioned Costs: The Home withdrew an additional $33,303 of depreciation costs in excess of the actual depreciation costs incurred for the month on ORR assets. Repeating Finding: No. Recommendation: We recommend that management properly calculate and reconcile depreciation expense on a monthly basis for fixed assets, specifically assets allocated to federal grants. We further recommend that the $33,303 excess depreciation costs drawn be paid back to the federal agency. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

2019-004? Approved / Budgeted Personnel Rates Type of Finding: Significant Deficiency / Noncompliance CFDA #93.676: 90ZU01198-02-00 and 90ZU0198-03-00 Office of Refugee and Resettlement- Unaccompanied Alien Children Criteria: Total salaries charged to Federal awards are subject to the Standards of Documentation as described by 2 CFR Section 200.430(i)(i) which says that records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: We noted that one ORR employee was not paid at the approved, budgeted rate for the specific position hired. The employee changed positions during the fiscal year, which decreased the employee?s hourly rate. Although a personnel action request form was approved, the lower rate was not updated and properly entered in the payroll software for the period of October 2018 ? April 2019. Cause: The change in pay rate was not reviewed/properly entered in the payroll software by HR to ensure it matched to the personal action request form and the approved ORR budget rate for the specific position. Effect or Potential Effect: Failure to comply with HR controls can generate errors that could go undetected and could impact an employees? pay and financial reporting over payroll transactions. Questioned Costs: The grant was overcharged by an amount of $264 during the months that the hourly rate was incorrectly listed in the payroll software. Repeating Finding: This is a repeat finding from the prior year audit (Finding 2018-003). Recommendation: We recommend that HR establish a control for a second review of rate changes entered into the payroll software to ensure they are adequately captured and agree to the pre-process payroll register. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

2019-005? Personnel Action Request Form Signatures Type of Finding: Significant Deficiency / Noncompliance CFDA #93.676: 90ZU01198-02-00 and 90ZU0198-03-00 Office of Refugee and Resettlement- Unaccompanied Alien Children Criteria: Total salaries charged to Federal awards are subject to the Standards of Documentation as described by 2 CFR Section 200.430(i)(i) which says that records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: The Home?s personnel action request (PAR) forms are required to be signed by the Director of Finance, Employee, VP of Programs, HR, and the Executive Director. For 18 PAR forms reviewed (with effective pay raises at February 1, 2019), we noted that the forms were missing the signature and acknowledgement of pay raise by the employees. Cause: The required signatures by employees were not documented in the personnel action request forms for final approval and employee acknowledgement. Effect or Potential Effect: Failure to comply with HR procedures can generate errors that could go undetected and could impact an employees? pay and financial reporting over payroll transactions. Questioned Costs: There are no questioned costs associated with this finding. Repeat Finding: This is a repeat finding from the prior year audit (Finding 2018-003). Recommendation: We recommend the Organization obtain all required employee signatures in the Personnel Action Forms when pay rate increases and new wage rates are issued to employees. Employees should be notified and aware of the amount of the raise to be provided. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

2019-006? Procurement Type of Finding: Significant Deficiency / Noncompliance CFDA #93.676: 90ZU01198-02-00 and 90ZU0198-03-00 Office of Refugee and Resettlement - Unaccompanied Alien Children Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements. In June 2018, the Home documented and approved a procurement policy which conforms to the applicable procurement requirements identified in 2 CFR Part 200 of the Uniform Guidance and establishes federal procurement thresholds and methods. The Home?s federal procurement policy requires the Small/Informal Procurement Method to be followed for purchases less than $50,000. Condition: The Home entered into four new capital lease agreements during the fiscal year. All vehicle costs were less than $50,000 and the Organization was required to comply with the Small/Informal procurement method. We noted that prior written approval for these purchases was not obtained from the Archdiocese of San Antonio and the documentation of records to show the selection of vendor, reasons for the selection, names of vendors and price quotes were not formally documented by the Program Director, as required by the Small/Informal Procurement method procedures. Cause: Internal controls did not ensure that the requirements of the Home?s procurement policy were followed. Effect or Potential Effect: Noncompliance over federal procurement requirements could impact current or future funding. Further, the absence of written documentation could result in a lack of evidence to ensure that procurement was made with fair and open competition. Questioned Costs: There are no questioned costs associated with this finding. Repeat Finding: No. Recommendation: We recommend the Home review and enforce procurement procedures to be followed by staff in order to ensure compliance with procurement policies and the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

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