ORUTSARARMUIT NATIVE COUNCIL, INCORPORATEDTribal Government

Finding 2022-005 Late Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury, U.S. Department of the Interior, U.S. Department of Housing and Urban Development, U.S. Department of Health and Human Services, and US Department of Education Federal Programs: Coronavirus State and Local Fiscal Recovery Fund (ARPA), Bureau of Indian Affairs Compact (BIA Compact), NAHASDA, Low Income Home Energy Assistance (LIHEAP), and Alaska Native Education Program (AK Native Ed), respectively. Assistance Listing Numbers: 21.027, 15.022, 14.867, 93.568, 84.356, respectively Award Numbers: SLFRP1627 and SLFRP5070 (ARPA), GT-OSGT043-16 (BIA Compact), 55-IT0211860 and 20BV0211860 (NAHASDA), 21RGAKEC6, 21RGAKLWC5, 21RGAKLIE4, 21RGAKLWC6, 22RGAKLIEA, 23RGAKLIEA, 23RGAKLIEE, and 23RGALLIEI (LIHEAP), 356A210011 (AK Native Ed) Award Years: 2021 (ARPA), 2022 (BIA Compact), 2022 (NAHASDA), 2021, 2022 and 2023 (LIHEAP), and 2022 (AK Native Ed). Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that the reporting package must be submitted within the earlier of nine months after year end or 30 days after the report issuance in accordance with the provisions of 2 CFR Section 200, subpart F, section 200.512. Condition and Context: The Council did not adhere to the Uniform Guidance requirement of submitting the reporting package within the earlier of 30 days after receipt of the audit report or nine months after year end.   Cause: Lack of internal control over Uniform Guidance reporting requirements. Effect: The Council was not in compliance with reporting requirements. Questioned Costs: None noted. Repeat Finding: Yes, this is a repeat of finding 2021-003. Since it is a repeat finding we believe this to be a systematic issue. Recommendation: We recommend that the Council comply with Uniform Guidance reporting requirements. Management’s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2022-006 Lack of Internal Control over Reporting Federal Agencies: U.S. Department of the Treasury, U.S. Department of Housing and Urban Development, and U.S. Department of Health and Human Services Federal Programs: Coronavirus State and Local Fiscal Recovery Fund (ARPA), NAHASDA, Low Income Home Energy Assistance (LIHEAP), respectively Assistance Listing Numbers: 21.027, 14.867, and 93.568, respectively Award Numbers: SLFRP1627 and SLFRP5070 (ARPA), 55-IT0211860 and 20BV0211860 (NAHASDA), 21RGAKEC6, 21RGAKLWC5, 21RGAKLIE4, 21RGAKLWC6, 22RGAKLIEA, 23RGAKLIEA, 23RGAKLIEE, and 23RGALLIEI (LIHEAP) Award Years: 2021 (ARPA), 2022 (NAHASDA), 2021, 2022 and 2023 (LIHEAP) Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over reporting should be in place to ensure that quarterly financial reports are reviewed and approved by a member of management prior to submission. Such approval processes should be clearly documented and maintained. These reports should also be in agreement with the underlying accounting system. Condition and Context: During our testing of reporting under the LIHEAP program, the Council was unable to provide sufficient documentation to determine whether the required annual performance report and quarterly financial reports were submitted during the year under audit. Therefore, we were unable to determine whether the reports, if any, were reviewed and approved by management, and submitted in a timely manner. During our testing of reporting under the ARPA program, it was determined that the annual financial report was not submitted timely. During our testing of reporting under the NAHASDA program, we determined that two quarterly financial reports out of the two tested were not submitted timely. Additionally, the Council was unable to provide sufficient documentation to determine whether the annual NAHASDA performance report was reviewed and approved by management and submitted timely. Cause: Lack of internal control over reporting. Effect: Lack of internal control over reporting could result in inaccurate and unauthorized reporting of program expenditures. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding for the major federal programs noted above, however, this was a reported finding for major programs audited as major in 2021 as finding 2021-005. Therefore, we believe this to be a systemic issue. Recommendation: We recommend that management strictly adheres to adopted internal control procedures related to grant reporting. Management’s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2022-007 Lack of Internal Control over Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Cash Disbursements Federal Agencies: US Department of the Interior, US Department of Housing and Urban Development, and US Department of Education Federal Programs: Bureau of Indian Affairs Compact (BIA Compact), NAHASDA, and Alaska Native Education Program (AK Native Ed), respectively Assistance Listing Numbers: 15.022, 14.867, 84.356, respectively Award Numbers: GT-OSGT043-16 (BIA Compact), 55-IT0211860 and 20BV0211860 (NAHASDA), 356A210011 (AK Native Ed) Award Years: 2022 (BIA Compact), 2022 (NAHASDA), and 2022 (AK Native Ed) Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over cash disbursement transactions should be in place to ensure that documentation is retained for a reasonable period of time, which includes proof of managerial approval, documentation of approval of account coding, and other necessary purchasing documents. Condition and Context: During our testing of cash disbursement transactions we noted 2 out of 25 transactions tested under the BIA Compact program, 2 out of 25 transactions tested under the NAHASDA program, and 1 out of 7 of the transactions tested under the AK Native Ed program which lacked necessary supporting documentation. Cause: Lack of internal control over compliance and activities allowed or unallowed and Allowable costs/cost principles cash disbursement transactions. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures coded to federal programs. Questioned Costs: $93,748 (NAHASDA), $113,598 (AK Native Ed). Known and likely questioned costs under the BIA Compact program are below the $25,000 reporting threshold. Repeat Finding: This is a repeat finding of 2021-006, therefore we believe it to be a systemic issue. Recommendation: We recommend the Council adheres to its internal control policies to ensure accurate reporting of cash disbursement transactions. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2022-008 Lack of Internal Control over Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Payroll Federal Agencies: U.S. Department of the Treasury, U.S. Department of the Interior, and US Department of Housing and Urban Development Federal Programs: Coronavirus State and Local Fiscal Recovery Fund (ARPA), Bureau of Indian Affairs Compact (BIA Compact), NAHASDA Assistance Listing Numbers: 21.027, 15.022, and 14.867 respectively Award Numbers: SLFRP1627 and SLFRP5070 (ARPA), GT-OSGT043-16 (BIA Compact), 55-IT0211860 and 20BV0211860 (NAHASDA) Award Years: 2021 (ARPA), 2022 (BIA Compact), 2022 (NAHASDA) Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates. Condition and Context: During our testing of payroll transactions, we noted 22 out of a sample of 62 payroll transactions, across the three major federal programs referenced above, which lacked necessary documentation to support management’s approval of employee pay rates. Cause: Lack of internal control over activities allowed or unallowed and allowable costs/cost principles payroll transactions, specifically related to personnel files. Effect: The lack of supporting documentation or approval for rates of pay allows for the potential for misstatement of expenditures or for employees to have incorrect rates of pay. Questioned Costs: The amount of known or likely questioned costs, if any, could not be determined. Repeat Finding: Yes, this is a repeat of finding 2021-006. Since it is a repeat finding we believe this to be a systematic issue. Recommendation: We recommend the Council adheres to its internal control policies to ensure accurate reporting of payroll transactions. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2022-009 Lack of Internal Control over Compliance and Noncompliance with Special Tests and Provisions – Investment and Deposit of Advance Funds Federal Agencies: US Department of the Interior, and US Department of Housing and Urban Development Federal Programs: Bureau of Indian Affairs Compact (BIA Compact), and NAHASDA Assistance Listing Numbers: 15.022, and 14.867, respectively Award Numbers: GT-OSGT043-16 (BIA Compact), 55-IT0211860 and 20BV0211860 (NAHASDA) Award Years: 2022 (BIA Compact) and 2022 (NAHASDA) Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Funds received in advance are required to be (1) invested only in obligations of the United States or in obligations or securities that are guaranteed or insured by the United States, or mutual (or other) funds registered with the Securities and Exchange Commission and which only invest in obligations of the United States or securities that are guaranteed or insured by the United States; or (2) deposited only in accounts that are insured by an agency or instrumentality of the United States, or are fully collateralized to ensure protection of the advance funds, even in the event of bank failure. Condition and Context: During our testing of special tests and provisions, management was unable to provide sufficient documentation to indicate that advance funds were being held in allowable investment securities or within fully insured and/or collateralized bank accounts. Cause: Lack of internal control over compliance and material noncompliance with the special tests and provisions requirement of the program. Effect: The lack of internal control over advance funds resulted in material noncompliance with the special tests and provisions requirements of the program. Questioned Costs: The amount of known or likely questioned costs, if any, could not be determined. Repeat Finding: Yes, this is a repeat of finding 2021-004. Since it is a repeat finding we believe this to be a systematic issue. Recommendation: We recommend the Council adheres to its internal control policies to ensure compliance requirements are met. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2022-010 Lack of Internal Control over Compliance and Noncompliance for Eligibility Federal Agencies: U.S. Department of Housing and Urban Development, and U.S. Department of Health and Human Services Federal Programs: NAHASDA and Low Income Home Energy Assistance (LIHEAP), respectively Assistance Listing Numbers: 14.867 and 93.568, respectively Award Numbers: 55-IT0211860 and 20BV0211860 (NAHASDA), 21RGAKEC6, 21RGAKLWC5, 21RGAKLIE4, 21RGAKLWC6, 22RGAKLIEA, 23RGAKLIEA, 23RGAKLIEE, and 23RGALLIEI (LIHEAP) Award Years: 2022 (NAHASDA), 2021, 2022 and 2023 (LIHEAP) Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over eligibility should be in place to ensure that individuals receiving benefits under federal programs are determined to be eligible and such determinations are documented, reviewed and approved by the necessary level of management, and maintained within an adequate filing system. Condition and Context: During our testing of eligibility under the NAHASDA program, the Council was unable to provide us with a listing of individuals who were served under the program. Therefore, eligibility testing could not be reasonably and adequately performed. During our testing of eligibility under the LIHEAP program, we noted that 11 of the 12 individuals tested lacked necessary documentation to support an eligibility determination and lacked approval by management. Cause: Lack of internal control over eligibility. Effect: Lack of internal control over eligibility could result in inaccurate and unauthorized allocation of funding to individuals within the community. Questioned Costs: The amount of known or likely questioned costs, if any, could not be determined. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management strictly adheres to adopted internal control procedures related to grant reporting. Management’s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2022-011 Lack of Internal Control over Compliance and Noncompliance Special Reporting Federal Agencies: U.S. Department of Education Federal Programs: Alaska Native Education Program Assistance Listing Numbers: 84.356A Award Numbers: 356A210011 Award Years: 2022 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Title 2 CFR 200.303 requires the Council to establish and maintain effective internal control over the federal award that provides reasonable assurance that the Council is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made and must include information about each obligating action in accordance with submission instructions. Condition and Context: FY22 Federal Funding Accountability and Transparency Act (FFATA) subaward reporting for Alaska Native Education Programs did not occur for one subaward. FFATA Requires information on federal awards to be made available to the public via a single searchable website (www.usaspending.gov). The FFATA Subaward Reporting System (FSRS) is the reporting tool federal awardees use to capture and report subawards regarding first-tier subawards. Cause: Lack of internal control over special reporting. Effect: Failure to comply with FFATA reporting requirements reduces transparency, impairs decision-making, and may potentially jeopardize future federal funding. Questioned Costs: None noted.   Repeat Finding: This is not a repeat finding. However, we believe this to be a systematic issue. Recommendation: We recommend the Council develop FFATA reporting policies and procedures to submit subaward information through FSRS to ensure compliance with FFATA requirements. Management’s Response: Management concurs with this finding. See Corrective Action Plan.

Federal Agencies: US Department of Treasury and Department of the Interior Federal Programs: CARES Act (CARES), ARPA, ERA and BIA Compact, respectively Assistance Listing Numbers: 21.019, 21.027, 21.023 and 15.022, respectively Award Numbers: None, None, ERA0672, GT-OSGT043-16, respectively Award Years: 2021 (CARES), 2021 (ARPA), 2021 (ERA) and 2021 (BIA Compact), respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that the reporting package must be submitted within the earlier of nine months after year end or 30 days after the report issuance in accordance with the provisions of 2 CFR Section 200, subpart F, section 200.512. Condition and Context: The Council did not adhere to the Uniform Guidance requirement of submitting the reporting package within the earlier of submitting the reporting package within the earlier 30 days after receipt of the audit report or nine months later the audit period. Cause: Lack of internal control over Uniform Guidance reporting requirements. Effect: The Council was not in compliance with reporting requirements. Questioned Costs: None noted. Repeat Finding: Yes, this is a repeat finding 2020-001. Since it is a repeat finding we believe this to be systematic issue. Recommendation: We recommend that the Council comply with Uniform Guidance reporting requirements. Management’s Response: Management agrees with this finding. See Corrective Action Plan

Federal Agency: US Department of the Interior Federal Program: BIA Compact Assistance Listing Number: 15.022 Award Number: GT-OSGT043-16 Award Year: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Funds received in advance are required to be (1) invested only in obligations of the United States or in obligations or securities that are guaranteed or insured by the United States, or mutual (or other) funds registered with the Securities and Exchange Commission and which only invest in obligations of the United States or securities that are guaranteed or insured by the United States; or (2) deposited only in accounts that are insured by an agency or instrumentality of the United States, or are fully collateralized to ensure protection of the advance funds, even in the event of bank failure. Condition and Context: During our testing of special tests and provisions, management was unable to provide sufficient documentation to indicate that advance funds were being held in allowable investment securities or within fully insured and/or collateralized bank accounts. Cause: Lack of internal control over compliance and material noncompliance with the special tests and provisions requirement of the program. Effect: The lack of internal control over advance funds resulted in material noncompliance with the special tests and provisions requirements of the program. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Council adheres to its internal control policies to ensure compliance requirements are met. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Federal Agencies: U.S. Department of the Treasury Federal Programs: Emergency Rental Assistance Program Assistance Listing Numbers: 21.023 Award Numbers: ERA0672 Award Years: 2021 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Adequate internal control over reporting should be in place to ensure that quarterly financial reports are reviewed and approved by a member of management prior to submission. Such approval processes should be clearly documented and maintained. These reports should also be in agreement with the underlying accounting system. Condition and Context: During our testing of quarterly financial reporting, the council was unable to produce sufficient documentation to indicate that quarterly financial reports were reviewed and approved by management prior to submission. Additionally, the two quarterly reports that were reviewed did not agree to the Council’s general ledger. Cause: Lack of internal control over reporting. Effect: Lack of internal control over reporting could result in inaccurate and unauthorized reporting of program expenditures. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding for the major federal program noted above, therefore, we believe this is not a systemic issue. Recommendation: We recommend that management strictly adheres to adopted internal control procedures related to grant reporting. Management’s Response: Management agrees with this finding. See Corrective Action Plan.

Federal Agency: US Department of the Interior Federal Program: BIA Compact Assistance Listing Number: 15.022 Award Number: GT-OSGT043-16 Award Year: 2021 Type of Finding: Significant deficiency in internal control over compliance. Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates. Condition and Context: During our testing of payroll transactions, we noted 10 out of a sample of 25 payroll transactions which lacked necessary documentation to support management’s approval of the employee’s rate of pay. Cause: Lack of internal control over payroll transactions, specifically related to personnel files. Effect: The lack of supporting documentation or approval for rates of pay allows for the potential for misstatement of expenditures or for employees to have incorrect rates of pay. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Council adheres to its internal control policies to ensure accurate reporting of payroll transactions. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2020-001 Lack of Internal Control Over Cash Management Federal Agencies: Department of Housing and Urban Development, and Department of Health and Human Services Federal Programs: Native American Housing Assistance and Self Determination Act (NAHASDA), and Indian Health Services (IHS) Assistance Listing Numbers: 14.862 and 93.933 respectively Award Number: 55IT0211860 and BH16IHS0147-04-00 respectively Award Year: 2020 and 2020 Type of Finding: Material weakness in internal control over compliance and material noncompliance Criteria: The requirements for cash management contained in 2 CFR Section 200.305 advanced federal cash payments may not be used for purposes other than program expenditures for the program receiving the advanced funds. Condition and Context: Procedures related to cash management were inadequate to ensure that the grant funds drawn down were used for grant expenditures. The Councils cash balance for all governmental funds amounted to $4,793,117 at December 31, 2020. While the unearned revenue balance at December 31, 2020 amounted to $5,863,647 resulting in a cash shortfall of $1,070,530. Cause: Inadequate internal controls over the use of restricted program funds. Effect: Unearned revenue balances exceed cash balances at year end. Questioned Costs: $1,070,530. The finding resulted from borrowing of federal funds to pay expenses in the General Fund. Repeat Finding: This is an isolated instance. Recommendation: The Council should implement internal controls and policies to limit the timing between cash outflows and reimbursements from granting agencies. Management?s Response: Management concurs with this finding. See Corrective Action Plan.

Finding 2020-002 Late Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury, and U.S. Department of Health and Human Services Federal Programs: CARES Act (CARES), and Demonstration Projects for Indian Health (DPIH), respectively Assistance Listing Numbers: 21.019, and 93.933, respectively Award Numbers: None (CARES), and BH16IHS0147-01-00 (DPIH), respectively Award Years: 2020 (CARES), and 2020 (DPIH), respectively Type of Finding: Significant deficiency in internal control over compliance. Criteria: Reporting requirements for CARES state that quarterly financial and narrative reports must be submitted within 10 days of quarter end. Reporting requirements for DPIH state that quarterly financial reports must be submitted within 30 days of quarter end. Condition and Context: The Council did not adhere to the quarterly reporting requirements specified in the grant agreements. During our review of the quarterly reports, it was noted that one quarterly report, of the two tested, for CARES was submitted 4 days after the deadline and one quarterly report, of the two tested, for DPIH was submitted 5 months after the deadline. Cause: Lack of internal control over reporting. Effect: Failure to follow compliance requirements could result in loss of Federal funding. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding for the major federal programs noted above, therefore, we believe this is not a systemic issue. Recommendation: We recommend that management strictly adheres to the timeliness requirement of the federal programs and ensures that quarterly financial reports are submitted before the applicable deadline. Management?s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2019-002: Late Reporting and Noncompliance with Reporting Requirements Significant Deficiency Noncompliance: U.S. Department of Transportation, passed through the Bureau of Indian Affairs, Highway Planning and Construction Program, CFDA #20.205, Grant Number: G2GE0204313, Grant year: 2019. Criteria: In accordance with grant provisions specified by the granting agency the Highway Planning and Construction Program requires two semi-annual reports be submitted to the granting agency within 90 days subsequent to the end of the applicable reporting period. Condition / Context: The Council did not adhere to the reporting requirements specified in the grant agreements. The semi-annual reports submitted for the DOT Road program were not submitted within the allowable time periods to the granting agency. Cause: Due to issues with the council?s new accounting software, it was unable to comply with the reporting requirements of the program. Effect: The council was not compliant with the grant reporting requirement. Late reporting could jeopardize grant funding. Questioned Costs: None. Recommendation: The issues that caused this occurrence have since been resolved. Management Response: See Corrective Action Plan.

GSA_MIGRATION

GSA_MIGRATION