EIN: 951642394
UEI: G88KLJR3KYT5
Audit also covers EIN: 850666499 · unlinked EINs have no separate FAC filing
Audited by: PRICEWATERHOUSECOOPERS, LLP
Cognizant agency: 84 [Department of Education]
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Data as of August 28, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on March 30, 2026. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by September 30, 2026 (30 days from today).
What is a management decision? →FAC accepted this audit on March 31, 2025 — management decision was due October 1, 2025.
Finding 2024-002: Unallowable costs over the NIH salary cap Cluster Name: Research and Development Federal Awarding Agency: Department of Health and Human Services Award Name: Alzheimer's Clinical Trial Consortium Award Number: 5U24AG057437-07 Award Years: 2023-2025 Assistance Listing Title: Aging Research Assistance Listing Number: 93.866 Pass-through entities: Not applicable Criteria The terms and conditions of the annual Consolidated Appropriations Act restrict the amount of direct salary chargeable to a grant under the National Institutes of Health (NIH) to an Executive Level II amount as defined by the Federal Executive pay scale. For the 2023 budget period (January 1 – December 31), this amount was $212,100. Effective January 1, 2024, the salary limitation for Executive Level II was $221,900. Condition In fiscal year 2024, a sample of 19 employees' monthly salaries were tested to assess compliance with the NIH salary cap requirements. Of the samples tested, 2 exceptions (both related to the same award) were identified where employees had amounts charged to NIH grants above the required salary cap. The total amount inappropriately charged to the grant above the salary cap requirement was $18,222. Cause As part of the University's grant management process, sub-grants may be established under a master grant within the financial reporting system to enable more precise budget management and expense tracking across various departments participating in a research project. In this instance, although the master grant included the necessary NIH salary cap restrictions, the individual responsible for manually setting up the sub-grant was unaware of these restrictions and failed to apply them during the sub-grant setup process. Effect The University overcharged the NIH award for amounts above the required salary cap, resulting in unallowable costs. Questioned Costs Total questioned costs identified through our testing were $18,222. Refer management’s analysis and response to this finding as reported within “Management’s Views and Corrective Action Plan” for further details over the extent of the exception identified. Recommendation We recommend management institute additional controls over the sub-grant set-up process to ensure the University complies with the NIH salary cap requirements. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2024-002: Unallowable costs over the NIH salary cap Cluster Name: Research and Development Federal Awarding Agency: Department of Health and Human Services Award Name: Alzheimer's Clinical Trial Consortium Award Number: 5U24AG057437-07 Award Years: 2023-2025 Assistance Listing Title: Aging Research Assistance Listing Number: 93.866 Pass-through entities: Not applicable Criteria The terms and conditions of the annual Consolidated Appropriations Act restrict the amount of direct salary chargeable to a grant under the National Institutes of Health (NIH) to an Executive Level II amount as defined by the Federal Executive pay scale. For the 2023 budget period (January 1 – December 31), this amount was $212,100. Effective January 1, 2024, the salary limitation for Executive Level II was $221,900. Condition In fiscal year 2024, a sample of 19 employees' monthly salaries were tested to assess compliance with the NIH salary cap requirements. Of the samples tested, 2 exceptions (both related to the same award) were identified where employees had amounts charged to NIH grants above the required salary cap. The total amount inappropriately charged to the grant above the salary cap requirement was $18,222. Cause As part of the University's grant management process, sub-grants may be established under a master grant within the financial reporting system to enable more precise budget management and expense tracking across various departments participating in a research project. In this instance, although the master grant included the necessary NIH salary cap restrictions, the individual responsible for manually setting up the sub-grant was unaware of these restrictions and failed to apply them during the sub-grant setup process. Effect The University overcharged the NIH award for amounts above the required salary cap, resulting in unallowable costs. Questioned Costs Total questioned costs identified through our testing were $18,222. Refer management’s analysis and response to this finding as reported within “Management’s Views and Corrective Action Plan” for further details over the extent of the exception identified. Recommendation We recommend management institute additional controls over the sub-grant set-up process to ensure the University complies with the NIH salary cap requirements. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Management’s Views and Corrective Action Plan Management response to finding 2024-002: Unallowable costs over the NIH salary cap Cluster Name: Research and Development Federal Awarding Agency: Department of Health and Human Services Award Name: Alzheimer's Clinical Trial Consortium Award Number: 5U24AG057437-07 Award Years: 2023-2025 Assistance Listing Title: Aging Research Assistance Listing Number: 93.866 Pass-through entities: Not applicable As described in finding 2024-002, the process for manually creating sub-grants within our financial systems required an attribute to be activated. In this instance the attribute in question was not activated, resulting in the NIH salary cap restriction not to be enforced within the payroll system. In November 2024, when this instance was identified, a correction was immediately made to stop any future amounts above the salary cap to be charged to the award and to avoid any further errors. To ensure any transactions that occurred while the incorrect system attribute was in place were properly addressed, corrective measures in the form of cost transfers were made during this period by the department to minimize inappropriate charges to the sponsor. As part of the university’s corrective action plan, the Sponsored Project Accounting (SPA) office has completed a full review of all awards and determined this to be an isolated event. As of March 2025, to further strengthen internal controls over compliance, the SPA office has implemented a revised approach for the creation of new manual sub-grants which will ensure the necessary NIH salary cap restrictions are applied. Additionally, training documents have been updated to reflect this revised approach, and all SPA staff have now received training on this new update. Contact Person: Cindy Lee, Director, Sponsored Projects Accounting, cmlee@usc.edu
Finding 2024-003: Unallowable costs – Cost transfers based on budgeted amounts Cluster Name: Research and Development Federal Awarding Agency: Department of Health and Human Services Award Name: Leveraging natural phenotypic variations of heterogenous ALS populations-in-a-dish to enable scalable drug discovery Award Number: 5R01NS131409-03 Award Years: 2022-2025 Assistance Listing Title: Extramural Research Programs in the Neurosciences and Neurological Disorders Assistance Listing Number: 93.853 Pass-through entities: Not applicable Criteria In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must be determined in accordance with generally accepted accounting principles (GAAP), reflecting actual expenses incurred and must be supported by adequate documentation to ensure compliance with federal requirements. Condition In fiscal year 2024, a sample of 25 cost transfers totaling $1,368,397 were tested to evaluate compliance with the relevant federal requirements. Of the samples tested, 1 exception was noted totaling $42,115 where budgeted expenditures were charged to a federal grant through a cost transfer before the actual expenditures were incurred by the University. Cause The error occurred due to a lack of proper training of the grant administrator who processed the cost transfer. Instead of verifying the underlying support and understanding the actual expenses incurred, they relied on budgeted figures to complete the transactions. Effect The incorrect cost transfer led to an overstatement of expenses on the receiving grant, resulting in unallowable and unsupported costs being charged to the federal award. Questioned Costs Total questioned costs were $42,115. Recommendation We recommend that management reinforce its existing policies regarding documentation and support for allowability of cost transfers to all members of the Department. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2024-003: Unallowable costs – Cost transfers based on budgeted amounts Cluster Name: Research and Development Federal Awarding Agency: Department of Health and Human Services Award Name: Leveraging natural phenotypic variations of heterogenous ALS populations-in-a-dish to enable scalable drug discovery Award Number: 5R01NS131409-03 Award Years: 2022-2025 Assistance Listing Title: Extramural Research Programs in the Neurosciences and Neurological Disorders Assistance Listing Number: 93.853 Pass-through entities: Not applicable Criteria In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must be determined in accordance with generally accepted accounting principles (GAAP), reflecting actual expenses incurred and must be supported by adequate documentation to ensure compliance with federal requirements. Condition In fiscal year 2024, a sample of 25 cost transfers totaling $1,368,397 were tested to evaluate compliance with the relevant federal requirements. Of the samples tested, 1 exception was noted totaling $42,115 where budgeted expenditures were charged to a federal grant through a cost transfer before the actual expenditures were incurred by the University. Cause The error occurred due to a lack of proper training of the grant administrator who processed the cost transfer. Instead of verifying the underlying support and understanding the actual expenses incurred, they relied on budgeted figures to complete the transactions. Effect The incorrect cost transfer led to an overstatement of expenses on the receiving grant, resulting in unallowable and unsupported costs being charged to the federal award. Questioned Costs Total questioned costs were $42,115. Recommendation We recommend that management reinforce its existing policies regarding documentation and support for allowability of cost transfers to all members of the Department. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Management’s Views and Corrective Action Plan Management response to finding 2024-003: Unallowable costs – Cost transfers based on budgeted amounts Cluster Name: Research and Development Federal Awarding Agency: Department of Health and Human Services Award Name: Leveraging natural phenotypic variations of heterogenous ALS populations-in-a-dish to enable scalable drug discovery Award Number: 5R01NS131409-03 Award Years: 2022-2025 Assistance Listing Title: Extramural Research Programs in the Neurosciences and Neurological Disorders Assistance Listing Number: 93.853 Pass-through entities: Not applicable As described in finding 2024-003, the university inadvertently processed a cost transfer moving expenses from one grant to another based on budgeted figures instead of actual expenses incurred. This resulted in an amount transferred that was greater than the actual costs incurred. The administrator in question has been identified and further review of this administrator’s work has been performed to determine if additional instances occurred. Upon review of the administrator’s work, it was determined that no additional corrections were required as no other instances of this nature were identified outside of the total questioned costs. As part of the department’s efforts to minimize further cost transfer errors, training was provided to all their grant administrators beginning November 1, 2024. This training will now be held annually to ensure the department responsible for administering the award is current on the University’s existing compliance policies. Furthermore, to support accuracy and transparency, the department will allocate separate time commitments during weekly administration meetings to review any required cost transfers. This time will be dedicated to ensuring proper documentation is in place, confirming the appropriateness of the transfer, and ensuring full compliance of the transaction(s). This updated review process involves representatives from Grant Administration, Keck School of Medicine Finance Office, and Purchasing, to ensure a full comprehensive review of each transfer. As such, beginning November 2024, a cost transfer will not move forward until it has been reviewed by the group. Contact Person: Andres Chan, Director, FBS Financial Analysis, andres.chan@usc.edu
Finding 2024-004: Review over cost transfers of subrecipient expenditures Cluster Name: Research and Development Federal Awarding Agency: Various Award Name: Various Award Number: Various Award Years: Various Assistance Listing Title: Various Assistance Listing Number: Various Pass-through entities: Various Criteria In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items. Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs. Condition In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified. Cause The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures. Effect A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated. Questioned Costs None noted. Recommendation We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2024-004: Review over cost transfers of subrecipient expenditures Cluster Name: Research and Development Federal Awarding Agency: Various Award Name: Various Award Number: Various Award Years: Various Assistance Listing Title: Various Assistance Listing Number: Various Pass-through entities: Various Criteria In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items. Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs. Condition In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified. Cause The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures. Effect A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated. Questioned Costs None noted. Recommendation We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Management’s Views and Corrective Action Plan Management response to finding 2024-004: Review over cost transfers of subrecipient expenditures Cluster Name: Research and Development Federal Awarding Agency: Various Award Name: Various Award Number: Various Award Years: Various Assistance Listing Title: Various Assistance Listing Number: Various Pass-through entities: Various As described in Finding 2024-004, and as a result of improper training related to the implementation of the university’s new financial system in FY22, the university lacked adequate controls to identify the proper application of indirect costs as it relates to subrecipient expenses when using the cost transfer process to make corrections. Additionally, the university failed to properly apply its policy for the classification of subawards versus direct expenditures. As such, while cost transfers are a small percentage of overall transfer activity, an update to training materials will be made by June 2025 to educate cost transfer initiators on the proper method to use for this subset of subrecipient expenditures. Since February 2025, the Sponsor Projects Accounting (SPA) representative responsible for central office review of cost transfers now reviews to ensure that all intended grant related attributes are in effect before approving any subrecipient cost transfers. Additionally, as of February 2025, the university reinforced its policy regarding the classification of subawards versus direct expenditures with both the Procurement department and the SPA staff to ensure the proper expenditure classification is set up during the onboarding process of a contractor. The SPA team has completed its analysis and review of all previous subrecipient cost transfers to verify and correct the improper application of indirect cost limits and expenditure classifications. As of March 2025, all subrecipient cost transfer errors have been identified and corrected, resulting in questioned costs of approximately $587,000. Separately, this resulted in an under-recovery of $306,000 of indirect costs that were not charged to the original award. As all awards impacted are still open and active, the correcting expenditure adjustments were applied to the awards impacted that will affect future draw downs. Contact Person: Cindy Lee, Director, Sponsored Projects Accounting, cmlee@usc.edu
FAC accepted this audit on April 1, 2024 — management decision was due October 1, 2024.
Finding 2023-001: Accuracy of expenditures on the Schedule of Expenditures of Federal Awards and submission of special reports for the Head Start Program Cluster Name: Head Start Federal Awarding Agency: Department of Health and Human Services Award Name: Head Start and Early Head Start, COVID (P.L. 116-260) Award Number: 09CH010228-05-05, 09CH011831-02-03, 09HE000328-01-00 Award Years: 2019-2021, 2021-2022, 2021-2023 Assistance Listing Title: Head Start Assistance Listing Number: 93.600 Pass-through entities: Not applicable Criteria 2 CFR 200.510 Financial statements requires auditees to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with the accounting records and other federal guidance. 2 CFR Part 200 Appendix XI Part 3-L-1 Performance and Special Reporting notes that non-federal entities may be required to submit performance reports at least annually but not more frequently than quarterly, except in unusual circumstances, using a form or format authorized by OMB (2 CFR section 200.329). They also may be required to submit special reports as required by the terms and conditions of the federal award. Condition The following errors were identified related to funding that was improperly included in the fiscal year 2023 SEFA and have subsequently been corrected in the fiscal year 2023 SEFA by the University, as a result of our audit procedures: • In fiscal year 2023, $283 thousand in budgeted capital expenditures were charged to and drawn down on Head Start awards before actual expenditures were incurred by the University. Management identified the error in the subsequent year and credited the fiscal year 2024 SEFA for this amount. Additionally, management refunded the federal agency $159 thousand of the amount in November 2023 and is in the process of refunding the remaining balance plus imputed interest. • In fiscal year 2023, $67 thousand in actual expenditures were charged to a Head Start award after liquidation extensions associated with the award had expired. Management identified the error in the subsequent year but had not yet credited the amount in the SEFA. None of the funds were drawn down from the federal agency, and thus, a refund to the federal agency was not required. Of the three required federal reports selected for testing, two were not submitted until selected for testing and one has not yet been submitted. Cause The University has limited federal awards that are utilized to fund capital expenditures. As a result, management was not aware that budgeted capital expenditures were being charged to the Head Start program in advance of being incurred by the University’s Facilities Management Services Department. Additionally, while the University’s IT system prevents the draw down of funding from federal agencies for awards that have expired, it does not prevent expenditures from being charged to expired awards. Management’s manual expenditure reconciliation process for the Head Start program failed to identify that expenditures were charged to the award after the expiration date in a timely manner. Management lacks a formalized process for identifying and tracking submission of required reports under the Head Start program. Effect A SEFA that is not accurate could impact the scoping of an entity’s major programs and result in inaccurate information being provided to the federal government. Not submitting required federal reports results in the federal government not having the information it needs to inform improvements in program outcomes and productivity. Questioned Costs None noted. Recommendation We recommend that management reinforce its existing policies regarding the charging of expenditures to the Head Start program with all departments involved in administering federal awards. Additionally, we recommend that management more timely reconcile expenditures charged to the Head Start program so that any necessary adjustments are reflected in the appropriate fiscal year. We recommend management implement a formal process to identify and track submission of required reports under the Head Start program. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2023-001: Accuracy of expenditures on the Schedule of Expenditures of Federal Awards and submission of special reports for the Head Start Program Cluster Name: Head Start Federal Awarding Agency: Department of Health and Human Services Award Name: Head Start and Early Head Start, COVID (P.L. 116-260) Award Number: 09CH010228-05-05, 09CH011831-02-03, 09HE000328-01-00 Award Years: 2019-2021, 2021-2022, 2021-2023 Assistance Listing Title: Head Start Assistance Listing Number: 93.600 Pass-through entities: Not applicable Criteria 2 CFR 200.510 Financial statements requires auditees to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with the accounting records and other federal guidance. 2 CFR Part 200 Appendix XI Part 3-L-1 Performance and Special Reporting notes that non-federal entities may be required to submit performance reports at least annually but not more frequently than quarterly, except in unusual circumstances, using a form or format authorized by OMB (2 CFR section 200.329). They also may be required to submit special reports as required by the terms and conditions of the federal award. Condition The following errors were identified related to funding that was improperly included in the fiscal year 2023 SEFA and have subsequently been corrected in the fiscal year 2023 SEFA by the University, as a result of our audit procedures: • In fiscal year 2023, $283 thousand in budgeted capital expenditures were charged to and drawn down on Head Start awards before actual expenditures were incurred by the University. Management identified the error in the subsequent year and credited the fiscal year 2024 SEFA for this amount. Additionally, management refunded the federal agency $159 thousand of the amount in November 2023 and is in the process of refunding the remaining balance plus imputed interest. • In fiscal year 2023, $67 thousand in actual expenditures were charged to a Head Start award after liquidation extensions associated with the award had expired. Management identified the error in the subsequent year but had not yet credited the amount in the SEFA. None of the funds were drawn down from the federal agency, and thus, a refund to the federal agency was not required. Of the three required federal reports selected for testing, two were not submitted until selected for testing and one has not yet been submitted. Cause The University has limited federal awards that are utilized to fund capital expenditures. As a result, management was not aware that budgeted capital expenditures were being charged to the Head Start program in advance of being incurred by the University’s Facilities Management Services Department. Additionally, while the University’s IT system prevents the draw down of funding from federal agencies for awards that have expired, it does not prevent expenditures from being charged to expired awards. Management’s manual expenditure reconciliation process for the Head Start program failed to identify that expenditures were charged to the award after the expiration date in a timely manner. Management lacks a formalized process for identifying and tracking submission of required reports under the Head Start program. Effect A SEFA that is not accurate could impact the scoping of an entity’s major programs and result in inaccurate information being provided to the federal government. Not submitting required federal reports results in the federal government not having the information it needs to inform improvements in program outcomes and productivity. Questioned Costs None noted. Recommendation We recommend that management reinforce its existing policies regarding the charging of expenditures to the Head Start program with all departments involved in administering federal awards. Additionally, we recommend that management more timely reconcile expenditures charged to the Head Start program so that any necessary adjustments are reflected in the appropriate fiscal year. We recommend management implement a formal process to identify and track submission of required reports under the Head Start program. Management’s Corrective Action Plan Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Management response to finding 2023-001: Accuracy of expenditures on the Schedule of Expenditures of Federal Awards and submission of special reports for the Head Start Program Cluster Name: Head Start Federal Awarding Agency: Department of Health and Human Services Award Name: Head Start and Early Head Start, COVID (P.L. 116-260) Award Number: 09CH010228-05-05, 09CH011831-02-03, 09HE000328-01-00 Award Years: 2019-2021, 2021-2022, 2021-2023 Assistance Listing Title: Head Start Assistance Listing Number: 93.600 Pass-through entities: Not applicable As described in finding 2023-001, the University inadvertently charged and drew down budgeted capital expenditures from Head Start awards before actual expenditures were incurred by the University. Additionally, the University charged expenditures to a Head Start award after liquidation extensions had expired. The adjustments required to correct these errors were identified in the subsequent fiscal year, resulting in expenditures on the fiscal year 2023 Schedule of Expenditures of Federal Awards (SEFA) being overstated. The University will take the necessary corrective actions as described below to ensure the accuracy of expenditures reported on the SEFA. Finally, as described in finding 2023-001, the University did not identify and track reports required to be submitted for Head Start awards. The corrective actions described below will ensure all award specific reporting requirements are met. Although the University has limited federal awards that are utilized to fund capital expenditures, the Office of Sponsored Projects Accounting and Facility Planning and Management will perform a full review of the current Head Start capital construction accounting policies and practices to ensure they comply with the Uniform Guidance and the terms and conditions of federal awards before June 30, 2024. Reinforcement of the University’s policies and practices will ensure proper grant accounting, and thus, will prevent SEFA reporting adjustments from having to be made. Faculty leadership responsible for overseeing the Head Start program at the University will fill current vacant financial management positions within the Head Start program as soon as possible (with a three month target), undergo a full review of program requirements with all staff, and modify and develop new internal controls related to this finding. Specifically, before July 2024, Head Start fiscal personnel along with faculty leadership will develop a reporting schedule specific to Head Start awards, provide training and resources to staff involved with reporting, implement internal controls related to the reconciliation and validation of reported data prior to report submission, and strengthen internal controls related to the allocability of expenditures to awards (particularly in situations where liquidation extensions or expenditure carry forwards have been granted). Contact Person: Andres Chan, Director, FBS Financial Analysis, andres.chan@usc.edu
FAC accepted this audit on March 30, 2023 — management decision was due September 30, 2023.
Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.
Show full finding ▾Hide full finding ▴Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.
Management response to finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Management agrees with the auditor?s findings and has concluded the incorrect option chosen was an inadvertent misinterpretation of the guidance. Please note this issue had no impact on the actual calculation of lost revenue nor did it result in a change to amounts recognized. On behalf of the University, Victor Perez, Director of Finance, contacted HRSA officials on September 15, 2021. The purpose of this contact was to receive guidance from HRSA for resolution of the incorrect option selection (option 2 rather than option 3) for the University?s Period 1 and Period 2 submissions. HRSA provided case number 00013184. HRSA informed the University they would not be reopening the portal, but HRSA would inform the University if any action was needed at a later date. We recommend management also contact HRSA to notify them of the inclusion of revenues not attributable to patient care in the budgeted revenues reported in the HRSA portal for Period 2. Further when revising the lost revenues methodology for Period 3 and beyond, the HRSA portal is configured to automatically reset, and the user is prompted to re-enter lost revenues for Periods 1 and 2. As such, management will select option 3 for all future submissions and will ensure that both the budgeted revenues and the actual revenues do not include revenues not attributable to patient care. As of the reporting date of March 31, 2023, no further communication from HRSA has been received by the University. Upon any future receipt of funds from a U.S. government program, management will design and implement an internal control around a secondary review of the most updated HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal. Contact Person: Sameer Alramahi, Corporate Controller, Keck Medicine of USC, sameer.alramahi@med.usc.edu
2021-002
Finding 2022-003: Notifications of Disbursements to Students Sent Prior to 30 Days before Crediting a Student?s Account Federal Awarding Agency: Department of Education (ED) Award Name: Federal Direct Student Loans Award Number: Various Award Years: 7/1/2021-6/30/2022 Assistance Listing Title: Federal Direct Student Loans Assistance Listing Number: 84.268 Pass-through entities: Not applicable Criteria 34 CFR 668.165(a)(3)(i) notes the timing of a Direct Loan or TEACH Grant notification varies depending on whether a school obtains affirmative confirmation from a student that he or she wants a loan or accepts the grant. Under affirmative confirmation, a school obtains written confirmation of the types and amounts of Title IV loans a student wants for the period of enrollment before the school credits the student?s account with those loan funds. This notification must be sent: ? if the school obtains affirmative confirmation, no earlier than 30 days before and no later than 30 days after crediting the student?s account; or ? if the school does NOT obtain affirmative confirmation, no earlier than 30 days before and no later than 7 days after crediting the student?s account. Condition 34 Direct Loans were tested for disbursements, in which the University received affirmative confirmation for all Direct Loans. In 11 of the 34 cases, the notification of disbursement was sent greater than 30 days prior to the distribution date. Cause The Student Information System (SIS) is configured to send notifications of disbursement based on activity by students in requesting and accepting loans. If the student accepts a loan prior to the deadline, the system will send the notification based on the origination date rather than the disbursement date. Effect The disbursement notifications were sent to students earlier than 30 days prior to the disbursement. Questioned Costs None noted. Recommendation We recommend management adjust the configuration of the system to send notifications no more than 30 days prior to crediting a student?s account, regardless of when the student accepts the loan. Management?s Corrective Action Plan Management?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2022-003: Notifications of Disbursements to Students Sent Prior to 30 Days before Crediting a Student?s Account Federal Awarding Agency: Department of Education (ED) Award Name: Federal Direct Student Loans Award Number: Various Award Years: 7/1/2021-6/30/2022 Assistance Listing Title: Federal Direct Student Loans Assistance Listing Number: 84.268 Pass-through entities: Not applicable Criteria 34 CFR 668.165(a)(3)(i) notes the timing of a Direct Loan or TEACH Grant notification varies depending on whether a school obtains affirmative confirmation from a student that he or she wants a loan or accepts the grant. Under affirmative confirmation, a school obtains written confirmation of the types and amounts of Title IV loans a student wants for the period of enrollment before the school credits the student?s account with those loan funds. This notification must be sent: ? if the school obtains affirmative confirmation, no earlier than 30 days before and no later than 30 days after crediting the student?s account; or ? if the school does NOT obtain affirmative confirmation, no earlier than 30 days before and no later than 7 days after crediting the student?s account. Condition 34 Direct Loans were tested for disbursements, in which the University received affirmative confirmation for all Direct Loans. In 11 of the 34 cases, the notification of disbursement was sent greater than 30 days prior to the distribution date. Cause The Student Information System (SIS) is configured to send notifications of disbursement based on activity by students in requesting and accepting loans. If the student accepts a loan prior to the deadline, the system will send the notification based on the origination date rather than the disbursement date. Effect The disbursement notifications were sent to students earlier than 30 days prior to the disbursement. Questioned Costs None noted. Recommendation We recommend management adjust the configuration of the system to send notifications no more than 30 days prior to crediting a student?s account, regardless of when the student accepts the loan. Management?s Corrective Action Plan Management?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2022-003: Notifications of Disbursements to Students Sent Prior to 30 Days before Crediting a Student?s Account Federal Awarding Agency: Department of Education (ED) Award Name: Federal Direct Student Loans Award Number: Various Award Years: 7/1/2021-6/30/2022 Assistance Listing Title: Federal Direct Student Loans Assistance Listing Number: 84.268 Pass-through entities: Not applicable As described in finding 2022-003, the Financial Aid Office (?FAO?) provided loan disbursement notifications earlier than 30 days from actual disbursement for some borrowers. Our Student Information System (SIS) was programmed to send the notification at the time the loan was originated, which may have been earlier than 30 days before the date of disbursement. FAO has updated the trigger in SIS so that the notifications will now be sent as soon as we receive the booking notice from COD, which is shortly after each disbursement. This update will ensure the notice is provided no later than 30 days after the date of disbursement (34 C.F.R. ? 668.165(a)(3)(i)). Contact Person: Megan Chan, Associate Dean, Compliance and Training, Enrollment Services Financial Aid Office, chanmega@usc.edu
FAC accepted this audit on June 30, 2022 — management decision was due December 30, 2022.
Finding 2021-001: Reporting of subrecipient expenditures on the Schedule of Expenditures of Federal AwardsFederal Awarding Agency: Department of Health and Human Services; Department of DefenseAward Name: VariousAward Number: VariousAward Years: 2017 through 2020Assistance Listing Title: Military Medical Research and Development, Basic Scientific Research, Human Genome Research, Mental Health Research Grants, Cancer Cause and Prevention Research, Aging ResearchAssistance Listing Number: 12.420, 12.431, 93.172, 93.242, 93.393, 93.866Pass-through entities: Various to the extent they pertain to certain Department of Health and Human Services / Department of Defense awards from 2017-2020CriteriaPer 2 CFR 200.510(b)(4) Financial statements, the entity is required to include the total amount provided to subrecipients from each Federal program in the Schedule of Expenditures of Federal Awards (the ?Schedule?).ConditionManagement identified certain pass-through funds to subrecipients, which had not been separately reported on the Schedule in fiscal years 2017 through 2020. The expenditures were recorded correctly in total, against the two agencies referenced above, but the amount of expenditures passed through to subrecipients should have been higher than originally reported on the Schedule. Amounts related to subrecipient expenditures, which were not broken out, are shown below for each fiscal year impacted: See Schedule of Findings and Questioned Costs for chart/table. CauseThe University maintains a report that is designed to capture all costs required to be broken out on the Schedule. The report includes system object codes where subrecipient costs are reported when expensed, however, the report did not capture certain new object codes, which were created beginning in fiscal year 2017. When completing the financial reporting process the Office of Financial Analysis was not aware of the newly created codes, and therefore did not include the new codes when preparing the Schedule. The new object codes that were not captured in the reporting were isolated to three departments of the University.EffectThe University underreported the amount of pass-through funds to subrecipients on the Schedule for fiscal years 2017 through 2020, however the total amount of expenditures included on the Schedule in each year was complete.Questioned CostsNone noted.RecommendationWe recommend that management ensure all object codes, where subrecipient costs are recorded, are properly included in their internal reporting when preparing the Schedule. This includes enhanced monitoring of where pass-through funds are recorded in the system, which is expected to be addressed during the implementation of a new system in the current fiscal year.Management?s Corrective Action PlanManagement?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2021-001: Reporting of subrecipient expenditures on the Schedule of Expenditures of Federal AwardsFederal Awarding Agency: Department of Health and Human Services; Department of DefenseAward Name: VariousAward Number: VariousAward Years: 2017 through 2020Assistance Listing Title: Military Medical Research and Development, Basic Scientific Research, Human Genome Research, Mental Health Research Grants, Cancer Cause and Prevention Research, Aging ResearchAssistance Listing Number: 12.420, 12.431, 93.172, 93.242, 93.393, 93.866Pass-through entities: Various to the extent they pertain to certain Department of Health and Human Services / Department of Defense awards from 2017-2020CriteriaPer 2 CFR 200.510(b)(4) Financial statements, the entity is required to include the total amount provided to subrecipients from each Federal program in the Schedule of Expenditures of Federal Awards (the ?Schedule?).ConditionManagement identified certain pass-through funds to subrecipients, which had not been separately reported on the Schedule in fiscal years 2017 through 2020. The expenditures were recorded correctly in total, against the two agencies referenced above, but the amount of expenditures passed through to subrecipients should have been higher than originally reported on the Schedule. Amounts related to subrecipient expenditures, which were not broken out, are shown below for each fiscal year impacted: See Schedule of Findings and Questioned Costs for chart/table. CauseThe University maintains a report that is designed to capture all costs required to be broken out on the Schedule. The report includes system object codes where subrecipient costs are reported when expensed, however, the report did not capture certain new object codes, which were created beginning in fiscal year 2017. When completing the financial reporting process the Office of Financial Analysis was not aware of the newly created codes, and therefore did not include the new codes when preparing the Schedule. The new object codes that were not captured in the reporting were isolated to three departments of the University.EffectThe University underreported the amount of pass-through funds to subrecipients on the Schedule for fiscal years 2017 through 2020, however the total amount of expenditures included on the Schedule in each year was complete.Questioned CostsNone noted.RecommendationWe recommend that management ensure all object codes, where subrecipient costs are recorded, are properly included in their internal reporting when preparing the Schedule. This includes enhanced monitoring of where pass-through funds are recorded in the system, which is expected to be addressed during the implementation of a new system in the current fiscal year.Management?s Corrective Action PlanManagement?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2021-001: Reporting of subrecipient expenditures on the Schedule of Expenditures of Federal AwardsFederal Awarding Agency: Department of Health and Human Services; Department of DefenseAward Name: VariousAward Number: VariousAward Years: 2017 through 2020Assistance Listing Title: Military Medical Research and Development, Basic Scientific Research, Human Genome Research, Mental Health Research Grants, Cancer Cause and Prevention Research, Aging ResearchAssistance Listing Number: 12.420, 12.431, 93.172, 93.242, 93.393, 93.866Pass-through entities: Various to the extent they pertain to certain Department of Health and Human Services / Department of Defense awards from 2017-2020As described in finding 2021-001, between 2017 and 2020, USC under reported, for three departments, the subrecipient portion on the SEFA report as a result of missed object codes with subrecipient expenditures. However, the total amount of reported expenditures was correctly reported for all years. The University implemented a new financial system on July 1, 2022, which tracks subrecipient expenditures by using four spend categories. The University?s previous financial system allowed for the creation of multiple object codes for subrecipient expenditures that were not flagged to ensure expenditures were appropriately captured in the total subrecipient expenditure reporting. We have implemented the following processes and procedures to ensure complete and accurate subrecipient expenditures:The new process requires spend categories for subrecipient monitoring allowing only four different types as follows:? One spend category for all grants/contracts? Two spend categories for use by our two Institutes? One spend category for our legacy converted dataThe new business process requires IT Intervention related to business process design and programming. This process does not generate a similar pattern of newly created spend categories as in our prior financial system.Additionally, a new governance counsel was established in November 2021, represented by various interested parties, meets regularly to discuss modifications that could affect Grant Management. This along with other Grants Management issues will be addressed promptly.Amongst the governance counsel, a sample of the offices represented are:? Office of Financial Analysis? Sponsored Project Administration? Accounts Payable? Facility Management? Office of Finance and Budget? Office of the Comptroller? PayrollContact Person: Andres Chan, Director, Financial and Business Services (213) 821-1937
Finding 2021-002: Allocation of Higher Education Emergency Relief Fund (?HEERF I?) FundsFederal Awarding Agency: Department of EducationAward Name: Higher Education Emergency Relief Fund (?HEERF I?)Award Number: P425E200208Award Years: 2021Assistance Listing Title: COVID-19 - Higher Education Emergency Relief Fund (?HEERF I?)Assistance Listing Number: 84.425EPass-through entities: Not applicableCriteriaAccording to the University's Funding Certification and Agreement Emergency Financial Aid Grants to Students under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the student portion of Higher Education Emergency Relief Fund should be used for direct payment of grants to students for their expenses related to the disruption of campus operations due to coronavirus. Additionally, the October 14, 2020 HEERF FAQs indicated that emergency financial aid grants to students should be made directly to the student and remain unencumbered by the institution; debt, charges, fees, or other amounts owed to the institution may not be deducted from the emergency financial aid grant.ConditionWe selected a sample of 40 students to test and ensure the costs charged to HEERF were allowable and conformed with the University?s policies and procedures for distributing the funds to students. Through our testing, we noted that for one selection, awarded as part of HEERF I, the award to the student was applied directly to the student?s outstanding account balance versus being paid directly to the student. While subsequent guidance was issued that indicated a student can consent to having HEERF funds directly applied to their outstanding balance, this transaction occurred prior to that guidance being published. The total award to this student was $500 and it was processed on September 25, 2020.CauseThe University processed a significant number of applications related to HEERF funds and did not have a formalized process for ensuring that funds awarded were not being directly allocated to students? outstanding account balances.EffectA student may not have received a HEERF payment in an expedited manner that would best allow them to deal with financial difficulties encountered during the COVID-19 pandemic.Questioned CostsNone noted.RecommendationWe recommend that management implement formal policies and procedures to ensure that emergency financial aid grants to students are disbursed in a manner that complies with the Department of Education?s applicable guidance.Management?s Corrective Action PlanManagement?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2021-002: Allocation of Higher Education Emergency Relief Fund (?HEERF I?) FundsFederal Awarding Agency: Department of EducationAward Name: Higher Education Emergency Relief Fund (?HEERF I?)Award Number: P425E200208Award Years: 2021Assistance Listing Title: COVID-19 - Higher Education Emergency Relief Fund (?HEERF I?)Assistance Listing Number: 84.425EPass-through entities: Not applicableCriteriaAccording to the University's Funding Certification and Agreement Emergency Financial Aid Grants to Students under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the student portion of Higher Education Emergency Relief Fund should be used for direct payment of grants to students for their expenses related to the disruption of campus operations due to coronavirus. Additionally, the October 14, 2020 HEERF FAQs indicated that emergency financial aid grants to students should be made directly to the student and remain unencumbered by the institution; debt, charges, fees, or other amounts owed to the institution may not be deducted from the emergency financial aid grant.ConditionWe selected a sample of 40 students to test and ensure the costs charged to HEERF were allowable and conformed with the University?s policies and procedures for distributing the funds to students. Through our testing, we noted that for one selection, awarded as part of HEERF I, the award to the student was applied directly to the student?s outstanding account balance versus being paid directly to the student. While subsequent guidance was issued that indicated a student can consent to having HEERF funds directly applied to their outstanding balance, this transaction occurred prior to that guidance being published. The total award to this student was $500 and it was processed on September 25, 2020.CauseThe University processed a significant number of applications related to HEERF funds and did not have a formalized process for ensuring that funds awarded were not being directly allocated to students? outstanding account balances.EffectA student may not have received a HEERF payment in an expedited manner that would best allow them to deal with financial difficulties encountered during the COVID-19 pandemic.Questioned CostsNone noted.RecommendationWe recommend that management implement formal policies and procedures to ensure that emergency financial aid grants to students are disbursed in a manner that complies with the Department of Education?s applicable guidance.Management?s Corrective Action PlanManagement?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2021-002: Allocation of Higher Education Emergency Relief Fund (?HEERF I?) FundsFederal Awarding Agency: Department of EducationAward Name: Higher Education Emergency Relief Fund (?HEERF I?)Award Number: P425E200208Award Years: 2021Assistance Listing Title: COVID-19 - Higher Education Emergency Relief Fund (?HEERF I?)Assistance Listing Number: 84.425EPass-through entities: Not applicableAs described in finding 2021-002, the University inadvertently allocated $500 of Higher Education Emergency Relief Funds (?HEERF I?) directly to one student?s account balance. On September 17, 2020, the student?s account balance was $6,500. The total grant amount of $500 was processed on September 25, 2020 and reduced the outstanding balance to $6,000. On September 27, 2020, the student submitted a web check payment to cover the remaining $6,000. We note that the student would have had to cover the $500 balance even if she had received the emergency grant by check or electronic funds transfer, so there was no harm to the student in this instance.After the Department of Education published guidance allowing students to consent to the application of emergency grants to their student accounts, the University implemented a process in April 2021 aligned with that guidance.Contact Person: Rosemary Kennedy, Associate Vice President, Financial Services (213) 821-2111
Finding 2021-003: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund PortalFederal Awarding Agency: Department of Health and Human Services (HHS)Award Name: COVID-19 - Provider Relief FundAward Number: VariousAward Years: 1/1/2020-6/30/2021Assistance Listing Title: COVID-19 - Provider Relief FundAssistance Listing Number: 93.498Pass-through entities: Not applicableCriteriaLaw (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below:Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals).Option 2) Difference Between 2020 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020.Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach).ConditionIn November 2021, management submitted their Reporting Period 1 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission.Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar year first and second quarters (January 1, 2021 through June 30, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their period 1 reporting into the HRSA portal. The table below depicts when Keck Medical Center of USC?s operating budgets were approved the Board. See Schedule of Findings and Questioned Costs for chart/table. CauseKeck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 1 which is January 1, 2020 through June 30, 2021 (including those periods falling within fiscal year 2020 and fiscal year 2021) must be approved prior to March 27, 2020 in order to select option 2.EffectThe budgets for calendar year Q3 and Q4 2020 and Q1 and Q2 2021 were not approved prior to March 27, 2020. If Keck Medical Center of USC had selected option 3, our understanding is they would have used a reasonable method for estimating lost revenues and included a narrative describing this approach in the PRF HRSA portal submission, which would not change the amount reported on the Schedule.Questioned CostsNone noted.RecommendationWe recommend management communicate the error in the Reporting Period 1 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.Management?s Corrective Action PlanManagement?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2021-003: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund PortalFederal Awarding Agency: Department of Health and Human Services (HHS)Award Name: COVID-19 - Provider Relief FundAward Number: VariousAward Years: 1/1/2020-6/30/2021Assistance Listing Title: COVID-19 - Provider Relief FundAssistance Listing Number: 93.498Pass-through entities: Not applicableCriteriaLaw (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below:Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals).Option 2) Difference Between 2020 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020.Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach).ConditionIn November 2021, management submitted their Reporting Period 1 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission.Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar year first and second quarters (January 1, 2021 through June 30, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their period 1 reporting into the HRSA portal. The table below depicts when Keck Medical Center of USC?s operating budgets were approved the Board. See Schedule of Findings and Questioned Costs for chart/table. CauseKeck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 1 which is January 1, 2020 through June 30, 2021 (including those periods falling within fiscal year 2020 and fiscal year 2021) must be approved prior to March 27, 2020 in order to select option 2.EffectThe budgets for calendar year Q3 and Q4 2020 and Q1 and Q2 2021 were not approved prior to March 27, 2020. If Keck Medical Center of USC had selected option 3, our understanding is they would have used a reasonable method for estimating lost revenues and included a narrative describing this approach in the PRF HRSA portal submission, which would not change the amount reported on the Schedule.Questioned CostsNone noted.RecommendationWe recommend management communicate the error in the Reporting Period 1 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.Management?s Corrective Action PlanManagement?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2021-003: Reporting with the Health Resources & Services Administration(HRSA) Provider Relief Fund PortalFederal Awarding Agency: Department of Health and Human Services (HHS)Award Name: COVID-19 - Provider Relief FundAward Number: VariousAward Years: 1/1/2020-6/30/2021Assistance Listing Title: COVID-19 - Provider Relief FundAssistance Listing Number: 93.498Pass-through entities: Not applicableKeck Medical Center of USC will take corrective action through notifying HRSA of the error in our previous filingand amending our reporting of lost revenue to reflect option 3, Lost Revenue Reporting Method: AlternativeReasonable Methodology which will include a narrative memo supporting the methodology. Keck Medical Centerof USC had already calculated the financial impacts of the pandemic using option 3 prior to the submission toHRSA in 2020 and will employ that work in our next submission to retroactively show that the total amount of theaward to which we are entitled does not change under option 3.Additionally, in the first quarter of the University?s fiscal year 2023, management will formalize review processesamong the Office of General Counsel, Office of the USC Health System Chief Financial Officer, and the new USCHealth System Corporate Controller?s Office to review HRSA guidelines, including applicable approval deadlines,as part of the workflow for any future submissions or applications for funding.Contact Person: Eric Strucko, Chief Financial Officer, Keck Medicine of USC, eric.strucko@med.usc.edu
FAC accepted this audit on June 17, 2021 — management decision was due December 17, 2021.
FAC accepted this audit on May 3, 2020 — management decision was due November 3, 2020.
Finding 2019-001: Federal Direct Subsidized Loan Limits ExceededFederal Awarding Agency: Department of EducationCluster: Student Financial AssistanceProgram names and specific award name: Federal Direct Student LoansCFDA #: 84.268Award #: P268K161192Award Years: Academic Year 2018 ? 2019Criteria34 CFR 685.203(d)(1) establishes aggregate Federal Direct Subsidized Loan limits that should not be exceeded.ConditionWe selected a sample of 60 students for testing from a total population of 22,696 students who were awarded Title IV assistance and tested those selected for various eligibility requirements across their respective aid awards. Of the students tested, we identified one student as having been over-awarded Federal Direct Subsidized Loans. Upon learning of this exception, the University reviewed the remaining population and identified 55 additional students, for a total of 56 students, that were over-awarded Federal Direct Subsidized Loans.CauseInstitutional Student Information Records include Student Aid Report (?SAR?) comment codes, some of which require resolution by the Financial Aid Office. The Financial Aid Office generates reporting within the Student Information System (?SIS?) to identify students with SAR comment codes that indicate students may have received a total amount of student loans that is close to or equal to the loan limits established for federal loan programs. The error was determined to have occurred due to reporting within SIS not being updated for additional SAR comment codes that were added for the 2018 ? 2019 academic year.EffectThe students identified were over-awarded Federal Direct Subsidized Loans.Questioned CostThe 56 students identified exceeded the Federal Direct Subsidized Loan limit by an aggregate of $123,989.RecommendationWe recommend that management enhance controls to ensure reporting within SIS is updated to reflect all SAR comment codes applicable to the academic year. We also recommend that the University discuss the appropriate resolution of the over-awarded Federal Direct Subsidized loans with the Department of Education.Management?s Views and Corrective Action PlanManagement?s response is reported in ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2019-001: Federal Direct Subsidized Loan Limits ExceededFederal Awarding Agency: Department of EducationCluster: Student Financial AssistanceProgram names and specific award name: Federal Direct Student LoansCFDA #: 84.268Award #: P268K161192Award Years: Academic Year 2018 ? 2019Criteria34 CFR 685.203(d)(1) establishes aggregate Federal Direct Subsidized Loan limits that should not be exceeded.ConditionWe selected a sample of 60 students for testing from a total population of 22,696 students who were awarded Title IV assistance and tested those selected for various eligibility requirements across their respective aid awards. Of the students tested, we identified one student as having been over-awarded Federal Direct Subsidized Loans. Upon learning of this exception, the University reviewed the remaining population and identified 55 additional students, for a total of 56 students, that were over-awarded Federal Direct Subsidized Loans.CauseInstitutional Student Information Records include Student Aid Report (?SAR?) comment codes, some of which require resolution by the Financial Aid Office. The Financial Aid Office generates reporting within the Student Information System (?SIS?) to identify students with SAR comment codes that indicate students may have received a total amount of student loans that is close to or equal to the loan limits established for federal loan programs. The error was determined to have occurred due to reporting within SIS not being updated for additional SAR comment codes that were added for the 2018 ? 2019 academic year.EffectThe students identified were over-awarded Federal Direct Subsidized Loans.Questioned CostThe 56 students identified exceeded the Federal Direct Subsidized Loan limit by an aggregate of $123,989.RecommendationWe recommend that management enhance controls to ensure reporting within SIS is updated to reflect all SAR comment codes applicable to the academic year. We also recommend that the University discuss the appropriate resolution of the over-awarded Federal Direct Subsidized loans with the Department of Education.Management?s Views and Corrective Action PlanManagement?s response is reported in ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2019-001: Federal Direct Subsidized Loan Limits ExceededAs described in finding 2019-001, the Financial Aid Office (?FAO?) thoroughly investigated the issue and reviewed the 56 affected students. Of the 56 students, 37 have already graduated and the rest have either repaid the overaward or have been asked for a reaffirmation agreement if they wish to continue to receive federal financial aid. Students who graduated do not need to do anything unless they wish to regain eligibility for federal financial aid (e.g., going to graduate school). Students can regain eligibility by consolidating their loans, repaying the excess loan amount, or completing a reaffirmation agreement. The FAO notes that students are already obligated to repay their student loans per the terms of their promissory notes.We revised the Aggregate Max report in the Student Information System (SIS) to capture all Aggregate Max comment codes on the Student Aid Report for review. Staff in the Loan Unit now use the revised report to check for overawards and adjust files as needed.Contact Person: Thomas McWhorter, Dean of Financial Aid, Enrollment Services (213) 740-5445
Finding 2019-002: Federal Direct Graduate PLUS Loan Entrance CounselingFederal Awarding Agency: Department of EducationCluster: Student Financial AssistanceProgram names and specific award name: Federal Direct Student LoansCFDA #: 84.268Award #: P268K161192Award Years: Academic Year 2018 ? 2019Criteria34 CFR 685.304(a) requires borrowers to complete entrance counseling prior to a school making the first disbursement of the proceeds of a loan.ConditionWe selected a sample of 60 students for testing from a total population of 22,696 students who were awarded Title IV assistance and tested the students for various eligibility requirements across their respective aid awards. Of the students tested, we identified one student that did not complete PLUS entrance counseling prior to being disbursed a Federal Direct Graduate PLUS loan. Upon learning of this exception, the University reviewed the remaining population and identified three additional students, for a total of four students, that were also affected.CauseThe University offers Progressive Degree programs that allow students to begin taking graduate courses while completing their undergraduate degree. The four students identified were undergraduate students in the Fall semester of 2018 and became graduate students in the Spring semester of 2019. The Financial Aid Office generates reporting within the Student Information System (?SIS?) to identify students that have not completed entrance counseling and takes action to ensure students identified complete entrance counseling prior to disbursing the loan. All four students received entrance counseling for Federal Direct Subsidized and Unsubsidized loans prior to being disbursed loan funds in the Fall semester of 2018. However, when these students became graduate students in the Spring semester of 2019, reporting within SIS did not identify that PLUS entrance loan counseling had not been completed for Federal Direct Graduate PLUS loans.EffectThe students identified did not receive PLUS entrance counseling prior to Federal Direct Graduate PLUS loans being disbursed.Questioned CostThe four students identified received $76,559 in Federal Direct Graduate PLUS loans prior to completing entrance counseling.RecommendationWe recommend that management enhance reporting within SIS to be able to identify students that progress from undergraduate to graduate students during the academic year to ensure these students complete Federal Direct Graduate PLUS loan entrance counseling prior to being disbursed loan funds.Management?s Views and Corrective Action PlanManagement?s response is reported in ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2019-002: Federal Direct Graduate PLUS Loan Entrance CounselingFederal Awarding Agency: Department of EducationCluster: Student Financial AssistanceProgram names and specific award name: Federal Direct Student LoansCFDA #: 84.268Award #: P268K161192Award Years: Academic Year 2018 ? 2019Criteria34 CFR 685.304(a) requires borrowers to complete entrance counseling prior to a school making the first disbursement of the proceeds of a loan.ConditionWe selected a sample of 60 students for testing from a total population of 22,696 students who were awarded Title IV assistance and tested the students for various eligibility requirements across their respective aid awards. Of the students tested, we identified one student that did not complete PLUS entrance counseling prior to being disbursed a Federal Direct Graduate PLUS loan. Upon learning of this exception, the University reviewed the remaining population and identified three additional students, for a total of four students, that were also affected.CauseThe University offers Progressive Degree programs that allow students to begin taking graduate courses while completing their undergraduate degree. The four students identified were undergraduate students in the Fall semester of 2018 and became graduate students in the Spring semester of 2019. The Financial Aid Office generates reporting within the Student Information System (?SIS?) to identify students that have not completed entrance counseling and takes action to ensure students identified complete entrance counseling prior to disbursing the loan. All four students received entrance counseling for Federal Direct Subsidized and Unsubsidized loans prior to being disbursed loan funds in the Fall semester of 2018. However, when these students became graduate students in the Spring semester of 2019, reporting within SIS did not identify that PLUS entrance loan counseling had not been completed for Federal Direct Graduate PLUS loans.EffectThe students identified did not receive PLUS entrance counseling prior to Federal Direct Graduate PLUS loans being disbursed.Questioned CostThe four students identified received $76,559 in Federal Direct Graduate PLUS loans prior to completing entrance counseling.RecommendationWe recommend that management enhance reporting within SIS to be able to identify students that progress from undergraduate to graduate students during the academic year to ensure these students complete Federal Direct Graduate PLUS loan entrance counseling prior to being disbursed loan funds.Management?s Views and Corrective Action PlanManagement?s response is reported in ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2019-002: Federal Direct Graduate PLUS Loan Entrance CounselingAs described in finding 2019-002, the FAO reviewed the four Progressive Degree students in 2018-2019 who did not complete PLUS entrance counseling prior to receiving Federal Direct Graduate PLUS loans. The FAO notes that these students completed entrance loan counseling for their Federal Direct Subsidized and Unsubsidized loans at the beginning of the academic year, thereby mitigating the impact of this finding. Moreover, students are already obligated to repay their student loans per the terms of their promissory notes.We updated the process tracking codes in SIS so that students who advance to graduate status in the middle of the academic year will not be able to receive Graduate PLUS loans until they have completed PLUS entrance counseling.Contact Person: Thomas McWhorter, Dean of Financial Aid, Enrollment Services (213) 740-5445
Finding 2019-003: Timing of Payment and Reimbursement of FundsFederal Awarding Agency: Department of EducationCluster: TRIOProgram names and specific award name: TRIO -Upward Bound; TRIO - Talent SearchCFDA #: 84.044; 84.047Award #: P044A160605 ? 18, P047M170185, P047A170499 - 18C, P047A170648 - 18Award Years: Academic Year 2018 ? 2019CriteriaAppendix XI to 2 CFR 200 (2019 OMB Compliance Supplement) Part 3, Section 3.1 C. Cash Management) states that when entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government.ConditionWe selected a sample of 16 individual drawdown requests on an invoice basis from a total population of drawdowns that were requested during fiscal year 2019. Of the samples tested, the University requested reimbursement before program costs were paid for six invoices for the awards listed above.CauseThe University extracted the amount of expenses charged to a Federal Award from the general ledger when preparing the cash drawdown invoices, which are sent to the awarding agency when a reimbursement request is made. Program costs are recorded as an accrual on the date they are incurred, rather than the date of payment, and as a result certain costs were not paid before the request for reimbursement of federal funds was made.EffectThe University received reimbursement for certain requests before payment of program costs was made.Questioned Cost$4,910RecommendationAs a result of testing the Research and Development Cluster in fiscal year 2018, we identified a similar finding as discussed in the accompanying Summary Schedule of Prior Audit Findings. In fiscal year 2019, management took corrective actions to address this finding for all programs, including the TRIO Cluster. However, although corrective actions were taken in June 2019, the deficiency existed for substantially all of fiscal year 2019.Management?s Views and Corrective Action PlanManagement?s response is reported in ?Management?s Views and Corrective Action Plan? at the end of this report.
Show full finding ▾Hide full finding ▴Finding 2019-003: Timing of Payment and Reimbursement of FundsFederal Awarding Agency: Department of EducationCluster: TRIOProgram names and specific award name: TRIO -Upward Bound; TRIO - Talent SearchCFDA #: 84.044; 84.047Award #: P044A160605 ? 18, P047M170185, P047A170499 - 18C, P047A170648 - 18Award Years: Academic Year 2018 ? 2019CriteriaAppendix XI to 2 CFR 200 (2019 OMB Compliance Supplement) Part 3, Section 3.1 C. Cash Management) states that when entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government.ConditionWe selected a sample of 16 individual drawdown requests on an invoice basis from a total population of drawdowns that were requested during fiscal year 2019. Of the samples tested, the University requested reimbursement before program costs were paid for six invoices for the awards listed above.CauseThe University extracted the amount of expenses charged to a Federal Award from the general ledger when preparing the cash drawdown invoices, which are sent to the awarding agency when a reimbursement request is made. Program costs are recorded as an accrual on the date they are incurred, rather than the date of payment, and as a result certain costs were not paid before the request for reimbursement of federal funds was made.EffectThe University received reimbursement for certain requests before payment of program costs was made.Questioned Cost$4,910RecommendationAs a result of testing the Research and Development Cluster in fiscal year 2018, we identified a similar finding as discussed in the accompanying Summary Schedule of Prior Audit Findings. In fiscal year 2019, management took corrective actions to address this finding for all programs, including the TRIO Cluster. However, although corrective actions were taken in June 2019, the deficiency existed for substantially all of fiscal year 2019.Management?s Views and Corrective Action PlanManagement?s response is reported in ?Management?s Views and Corrective Action Plan? at the end of this report.
Management response to finding 2019-003: Timing of Payment and Reimbursement of FundsIn response to finding 2019-003, the University has designed and implemented appropriate controls to ensure cash draws under the reimbursement method are completed after all payments have been made. This process was implemented in June 2019 to ensure that Federal cash draw-downs do not occur prior to the University wiring funds or cutting the check.Contact Person: Robert Johnson, Associate Senior Vice President, Financial and Business Services, (213) 821-1900
FAC accepted this audit on March 29, 2019 — management decision was due September 29, 2019.
GSA_MIGRATION
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GSA_MIGRATION
FAC accepted this audit on March 25, 2018 — management decision was due September 25, 2018.
GSA_MIGRATION
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GSA_MIGRATION
FAC accepted this audit on March 14, 2017 — management decision was due September 14, 2017.
GSA_MIGRATION
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GSA_MIGRATION
2015-002
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