SUNNY GLEN CHILDREN'S HOMENon-Profit

Statement of Condition: Twelve expenditures of direct costs were for the acquisition of equipment and other capital expenditures which did not receive timely written approval from HHHS. Criteria: Equipment and other capital expenditures require prior written approval by the HHS awarding agency or pass-through entity prior to obligating or incurring the costs. This section also disallows equipment and other capital expenditures as indirect costs. Further, the Office of Federal Financial Management (OMB) Compliance Supplement establishes that requests for prior approval must be explicit enough so that the Administration for Children and Families (ACF) can identify the purpose and cost of the expenditure. Approval of budgets that include general budgetary descriptions and budget line-item totals are insufficient. Additionally, grantees must receive written approval from an authorized member of ACF. A lack of response is not, in itself, approval. Cause: The Home considers approval during the budget and negotiation process as an implicit approval for proposed equipment and capital expenditures. Upon approval of the budget by the HHS, a Notice of Award is granted to the Home. This Notice of Award delineates the purchases of equipment approved and amounts budgeted for each line-item. Effect: Capital expenditures incurred may be disallowed. Context: The test found nine of sixty expenditures were not in compliance; with questioned costs totaling $371,642. Recommendation: The Home should obtain explicit prior written approval for equipment and other capital expenditures. Views of Responsible Officials and Planned Corrective Action: The Home agrees that the records maintained did not support prior written approval of aforementioned costs. However, the Home disagrees with the finding regarding the allowability of the vehicle leases. The Home provided ORR with the request to budget for the vehicle leases, as well as copies of lease terms, prior to the approval of the grant and the amounts budgeted were approved. Regarding the capital expenditures, these items were reasonable and necessary to facilitate the program and The Home will request to have these purchases approved retro-actively. The Home is currently in the process of appealing the capital lease ? vehicle rentals disallowed in the ACF?s Notice of Non-Compliance: Monetary Disallowance dated July 12, 2023. See additional information at Note 19.

Statement of Condition: Six expenditures of direct and indirect costs were inaccurately calculated by the Home. Criteria: Procedures should be established to ensure adequate separation of duties and review is performed on the calculation of direct and indirect costs. Cause: During 2022, the calculation of direct and indirect costs was conducted with minimal review. This environment was subject to human error in the performance of these calculations and respective drawdown of funds. Effect: The cost of assistance may be disallowed. Context: The test found six of sixty expenditures were not in compliance; with questioned costs totaling $254,173. Recommendation: The Home should segregate duties of measurement of direct and indirect costs, detailed review of measurement, and high-level review and drawdown to separate members of the accounting staff. Views of Responsible Officials and Planned Corrective Action: The Home agrees with the finding. The funds were drawn down from the grant due to human error. Shortly after discovering this mistake, The Home has developed a process in which the drawn down amounts is reviewed and approved before processing the drawdown. The amounts overdrawn were used to pay grant expenditures during FY2023, which still covers the grant budget period.

Statement of Condition: On July 12, 2023, the Home received notice from the Administration for Children and Families (ACF) of a final judgement of disallowance regarding several categories of expenditures. Criteria: During the period of August 1, 2019 through July 1, 2020, the Home failed to comply with statutory authority; the Code of Federal Regulations (CFR), Title 45 Part 75, particularly 45 CFR ?75.302 Financial Management and Standards for Financial Management Systems, 45 CFR ? 75.303 Internal Controls, 45 CFR ?75.309 Period of Performance and Availability of Funds, 45 CFR ? 75.361 Retention Requirements for Records, 45 CFR ?75.403 Factors Affecting Allowability of Costs, 45 CFR ?75.404 Reasonable Costs, 45 CFR ?75.405 Allocable Costs, 45 CFR ?75.407 Prior Written Approval, 45 CFR ?75.431 Compensation ? fringe benefits, 45 CFR ?75.421 Advertising and Public Relations, 45 CFR ?75.436 Depreciation, 45 CFR ?75.439 Equipment and Other Capital Expenditures, 45 CFR ?75.452 Maintenance and Repair Costs, 45 CFR ?75.465 Rental Costs of Real Property and Equipment, 45 CFR ?75.470 Taxes; the Department of Health and Human Services? Grants Policy Statement; and other regulations governing allowable costs under HHS awards. The Home is in the process of timely appealing this disallowance with the Departmental Appeals Board in accordance with 45 CFR Part 16 Procedures of the Departmental Grant Appeals Board. ause: Noncompliance stems from a lack of formal training, inadequate internal controls, an inadequate review process and procedures, and a lack of supporting documentation. Effect: Expenditures in the amount of $5,094,545, made during the period of August 1, 2019 through July 31, 2020, were deemed disallowable. Recommendation: The Home should plan for alternate scenarios for both favorable and unfavorable results from the appeals board. In addition, the Home should implement more thorough training, controls and review to their existing processes, including those mentioned in finding 2022-001, 2022-002, and 2002-003. Views of Responsible Officials and Planned Corrective Action: The Home disagrees with the disallowance and maintains that the ACF made legal and factual errors in taking the disallowance and that expenses incurred were necessary, reasonable, allocable and allowable. The Home is working with a consultant to establish standard operating procedures and workflows relating to the accounting function.

2019-001Criteria - CFDA 93.676 Unaccompanied Alien Children Program; Salaries and benefits charged tothe grant must be for personnel with minimum specified requirements.Statements of Condition ? 26 employees who received wages from grant funding were tested toverify adherence to grant agreement. One of these employees did not meet grant specifications. Thisis a single exception and is not considered a significant deficiency.Questioned Costs ? The total questioned cost was $6,505 which is comprised of wages in the amountof $4,191, benefits of $1,203, and indirect costs of $1,111.Recommendations ? Hiring managers need to be trained on grant requirements regarding positionsbeing filled. We recommend that all grant funded positions be reviewed for compliance with grantrequirements and that a more comprehensive review process be implemented for future hires. We alsorecommend that when submitting potential hires for approval to the ORR that those who don?texplicitly meet grant requirements be clearly disclosed to maintain transparency.Views of Responsible Officials ? We concur. Hiring managers will be reminded on requiredqualifications from any position that is being posted by the grant. We have recently hired a SeniorHuman Resource Manager who will be reviewing any potential employees? qualifications beforepreparing an offer letter to ensure that they meet the qualifications set forth by the grantor. Inaddition, we will be remitting wages paid to that employee for the month subsequent to year end.

Criteria - CFDA 93.676 Unaccompanied Alien Children Program; Funds drawn must be utilizedwithin three business days of receipt.Statements of Condition ? The Office of Refugee Resettlement requires that fringe benefits bedrawn based on a predetermined agreement which differs from employees not paid with grant funds.The differences in the ORR calculation and the calculation already in use at the start of the grantperiod resulted in cash being drawn in advance of actual disbursement, in violation of requirements asspecified in the uniform guidance. This is a single exception not caused by a weakness in internalcontrol and is not considered a significant deficiency.Questioned Costs ? No questioned costs associated with this instance of noncompliance. Subsequentfringe benefit estimations were underreported in order to offset the excess. The result at year end wasan overall under draw on total fringe benefits.Recommendations ? Accounting corrected the calculation error to avoid continued overestimation.This calculation should be reviewed for reasonableness every pay period prior to draw down. Nofurther recommendations are considered necessary.Views of Responsible Officials ? Amounts drawn for fringe benefits were drawn based on aprocedure that was devised to provide funds to cover fringe benefits that have already been earned butnot paid to employees. After reviewing this process, we have concluded the process was not accuratein regards to employees paid with grant funding. We have implemented a new method in which weare withdrawing the funds needed for actual fringe benefits that have been incurred by the employeeon a payroll basis.