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Audits, Evaluations and Reviews
Audits, Evaluations and Reviews
The Audit identified costs of $886,845 that were unsupported by required documentation and/or incurred improperly, in violation of applicable laws, regulations and grant terms and conditions. This represents 36 percent of the $2.5 million in grants awarded to ORI during the period from June 2008 to September 2011. The Office of Inspector General (OIG) audit also discovered pervasive noncompliance and internal control deficiencies across all of the Corporation's sponsored programs, many of which persisted despite ORI's prior assurances to multiple State Commissions that these problems were being rectified. Inadequate financial management, poor record retention and lack of oversight of service sites resulted in substantial mismanagement of Federal and match funds. These deficiencies placed Federal funds at such substantial risk that, in the midst of the audit, the OIG alerted the Corporation and representatives of the State Commissions of Alabama, Louisiana and Georgia, enabling them to take immediate action to prevent further losses.
The Office of Inspector General (OIG) of the Corporation for National and Community Service (the Corporation) contracted with Kearney & Company, P.C. (referred to as "Kearney", "we", and "our" in this report) to perform agreed-upon procedures (AUP) to assist the OIG in grant cost and compliance testing of Corporation-funded Federal assistance provided to the Michigan Community Service Commission (the Commission).
Kearney questioned the Commission's claimed Federal share costs of $243,536 and education awards of $33,075 as a result of applying the AUPs. A questioned cost is an alleged violation of a provision of a law, regulation, contract, grant, cooperative agreement, or other agreement or document governing the expenditure of funds. A questioned cost may also include a finding that, at the time of testing, includes costs not supported by adequate documentation.
Claimed costs and questioned costs are presented in this document in Exhibit A, Consolidated Schedule of Claimed and Questioned Costs, and the supporting schedules (Schedules A through F).
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), contracted with Cotton & Company LLP to perform agreed-upon procedures (AUPs) to assist the OIG in grant cost and compliance testing of Corporation-funded Federal assistance provided to Oregon Commission for Voluntary Action and Service (Oregon Volunteers).
Summary of Results
As a result of applying our procedures, we questioned claimed Federal-share costs of $391,604, education awards of $158,153, accrued interest of $10,025, and childcare benefits of $348. Participants who successfully complete terms of service under AmeriCorps grants are eligible for education awards, and in some cases, repayment of student-loan interest accrued during their service terms (accrued interest) funded by the Corporation's National Service Trust. During their term of service AmeriCorps members may also be eligible for childcare benefits funded by the Corporation but the benefits are not part of the grant funds. Based on the same criteria used for the grantee's claimed costs, we determined the effect of our findings on eligibility for education and accrued-interest awards and childcare benefits. Detailed results of our AUP on claimed costs are in Exhibit A, Consolidated Schedule of Claimed and Questioned Costs, and the supporting schedules.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), contracted with Cotton & Company LLP to perform agreed-upon procedures (AUPs) to assist the OIG in grant cost and compliance testing of Corporation-funded Federal assistance provided to AIDS United (AU).
Summary Of Results For Americorps Awards
As a result of applying the procedures, we questioned claimed Federal-share costs of $33,593 and an education award of $5,350.
Participants who successfully complete terms of service under AmeriCorps grants are eligible for education awards and, in some cases, accrued interest; both are funded by the Corporation's National Service Trust. AmeriCorps members may also be eligible for childcare benefits funded by the Corporation. As part of our AUP and using the same criteria used for AU's claimed costs, we determined the effect of our findings on education awards, accrued interest, and childcare benefits. Detailed results of our AUP on claimed costs are in Exhibit A, Consolidated Schedule of Claimed and Questioned Costs, and the supporting schedules.
AU claimed unemployment insurance costs for its members but required its members to sign forms, which stated they were ineligible for unemployment insurance. As discussed in Finding 3a., we questioned $14,456 of costs claimed by AU for these expenses.
Summary Of Results For Social Innovation Fund Award
As a result of applying the procedures, we questioned claimed Federal-share costs of $361,836. Our observations during fieldwork revealed deficiencies in several facets of the program.
AU calculated Social Innovation Fund (SIF) indirect costs using the full amount of subawards. However, indirect costs can only be applied to the first $25,000 of subawards made to each of AU's 10 SIF subgrantees. This incorrect calculation resulted in overstated Federal indirect costs of $69,382. In addition, AU limited the Federal share of indirect costs to 5 percent of total Federal costs, or 5.26 percent of total direct Federal costs instead of AU's 10.5 percent Negotiated Indirect Cost Rate Agreement (NICRA) rate. As discussed in Exhibit B Finding 2, we questioned $69,832.
AU awarded SIF subgrantees a fixed administrative fee of 5 percent of total Federal costs, although the final Notice of Funds Availability (NOFA) and SIF Cooperative Agreement Terms and Conditions required NICRAs for the subgrantees. As discussed in Exhibit B Finding 2b., we questioned $13,570.
AU and its subgrantees did not have procedures to ensure that advances were disbursed in a timely manner. AU initially provided its SIF subgrantees with lump-sum cash advances at the beginning of the projects. After it learned that it was not permitted to advance funds to subgrantees, AU switched to a reimbursement method. AU's September 30, 2011 Federal Cash Transaction Report (FCTR) showed that cash drawdowns equaled Federal expenditures; the expenditures included advances from its SIF subgrantees to subcontractors. One of its subgranteees provided advances of $93,816 to subcontractors in March 2011; however, the subgrantee did not require its subcontractors to submit financial reports summarizing expenditures until September 2011. Further, financial reports submitted were only spreadsheet summaries of expenditures that did not include details, such as dates subcontractors incurred expenditures. A second subgrantee provided advances of $74,500 in March 2011 and advances of $36,000 to subcontractors in October 2011. It did not require subgrantees to provide reconciliations of budget-to-actual expenditures until the end of the grant year, and had not determined what supporting documentation it would require its subcontractors to submit to them.
AU misinterpreted SIF regulations and improperly modified its SIF subgrantee agreements. It included a condition in its original subgrant agreements that required the subgrantees to provide a 50 percent cash match and required the match to be received by the end of each 12-month funding period. However, it subsequently amended its subgrantee agreements and revised the wording of its matching funds condition. The revised condition stated that AU's subgrantees were required to provide matching funds in cash, and these funds were required to be expended by the end of the three-year grant period. If AU approved an extension, the grant period could be extended for one to two additional years for total of five years. This change did not however comply with the National Community Service Act which requires subgrantees to provide matching funds annually for each fiscal year and prohibits grantees from making payments in the remaining fiscal years of the subgrant period to any subgrantee that fails to provide matching funds for a fiscal year.
AU's record retention policy requires check registers, journal entries, paid accounts payable invoices, and accounts receivable invoices are required to be retained for period of seven years. This retention period may not be long enough for its Social Innovation Fund (SIF) grant, which has a grant period of five years. With a five-year grant period, AU could be required to retain records for eight years, calculated as its award period of five years plus three years after submission of the last FFR for the grant. Further, the retention period could increase to more than eight years if the grant period is extended beyond its original end date.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), contracted with CliftonLarsonAllen LLP (auditors) to perform agreed-upon procedures (AUP) on grant cost and compliance with applicable regulations for Corporation funded Federal assistance provided to The New Teacher Project (TNTP).
As a result of applying the procedures, the auditors questioned claimed Federal share costs of $2,826, match costs of $7,777, and education awards of $98,680. A questioned cost is an alleged violation or non-compliance with grant terms and/or provisions of laws and regulations governing the expenditures of funds; or a finding that, at the time of testing, adequate documentation supporting a cost item was not readily available. The results of our agreed-upon procedures are summarized in the Consolidated Schedule of Award Costs (Schedule A).
Office of Management and Budget (OMB) Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations establishes audit requirements and defines Federal agencies responsibilities for implementing and monitoring requirements for organizations receiving direct or indirect Federal awards.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), performed an audit of the National Service Trust Payments to Financial and Education Institutions. Our audit objectives were to determine whether National Service Trust (Trust) payments, including interest forbearance, were made to legitimate financial and educational institutions; were properly reviewed and approved prior to disbursement; were accurately recorded in a timely manner; and the Corporation has adequate internal controls over the Trust payment process.
During our audit, nothing came to our attention that institutions we reviewed are not legitimate and we did not note any improper payments from our samples. Also, we noted that our selected Trust payments were recorded timely, and properly reviewed and approved prior to disbursements.
However, we found that the Corporation had no documented review process to verify that financial institutions have a qualified student loan that is eligible to receive an education award disbursement. We also noted that there was no documented review process to verify that installment payments were paid in accordance with Title 45 of the Code of Federal Regulations (C.F.R.) § 2528.30(c), Installment Payments. Although the financial institution samples we selected and reviewed appeared to be legitimate, we found that the Corporation solely relies on the institution's self-validation to certify their eligibility to receive education awards and comply with applicable regulations. We further noted that there were multiple duplicated financial and education institutions recorded in the eSpan system and some of the samples we selected had been incorrectly inactivated by the Corporation personnel. This condition could lead to invalid institutions receiving Trust disbursements and improper payments. Also, Trust disbursements could be delayed if they are sent to an incorrect institution, or to an institution that is listed in eSpan system, but with multiple institution identifications in the eSpan system.
Based on our audit findings, we recommend the Corporation document and implement scheduled reviews of disbursements to financial institutions to validate that education awards are paid to a qualified loan and ensure that installment payments are being disbursed in accordance with Title 45 C.F.R. § 2528.30(c). We also recommend the Corporation reviews the validity and existence of financial and education institutions recorded in the eSpan on a regular basis, ensure the institutions are registered through the MyAmeriCorps Portal2, and input comment in the eSpan system on the Institution Maintenance Screen that includes written reason(s) when an institution becomes inactive, its date of inactivation, and the identification of the Trust personnel who initiates the institution inactivation.
In response to the President’s July 2010 mandate on implementing the Improper Payments Elimination and Recovery Act (IPERA), the Office of Inspector General (OIG), Corporation for National and Community Service (Corporation) performed an evaluation of the Corporation'S compliance with IPERA. An improper payment is defined as any payment that should not have been made or that was made in an incorrect amount, any payment to an ineligible recipient or for ineligible goods or services, any duplicate payment, any payment for goods or services not received, or any payment that does not account for credit for applicable discounts. Office of Management and Budget (OMB) guidance also instructs agencies to report as improper payments of any payments for which insufficient or no documentation was found.
The objective of our evaluation was to determine whether the Corporation performed its improper payment assessment in compliance with IPERA, applicable Executive Orders, and the OMB guidance. The evaluation was conducted in accordance with the Quality Standards for Inspection and Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), performed an audit of the Social Innovation Fund (SIF) issue-based grant awarded (Grant No. 11 SIHDC001) to the US Soccer Federation Foundation (USSFF). The purpose of the audit was to determine whether USSFF's financial management system was in compliance with applicable laws, regulations and grant provisions, and whether adequate internal controls were in place. The Corporation awarded SIF grants for the first time in Fiscal Year (FY) 2010. The OIG conducted preaward financial management system reviews for selected FY 2010 SIF applicants. This SIF financial management system audit was conducted from August 26 to November 28, 2011, after the grant had been awarded, but before USSFF selected any sub-recipients or expended any grant funds.
This is USSFF's first grant from the Corporation and second Federal grant from any source. The SIF grant awarded to USSFF will support the implementation and operations of Soccer for Success (SfS), a no-cost, after-school, sports-based youth development program. The goal of SfS is to improve health by arresting and reducing obesity through physical activity and nutrition education. A secondary indirect goal of SfS is to improve social and academic outcomes. USSFF awards subgrants to 10 to 14 nationally selected organizations. It received unqualified opinions on its financial statement audits for FYs 2010, 2009, and 2008. It did not meet the $500,000 Office of Management and Budget (OMB) Circular A-133 audit threshold in any of those years.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), performed an audit of Corporation grants awarded to Wayne County Action Program, Inc. (WCAP). The purpose of the audit was to determine whether WCAP was in compliance with applicable laws, regulations, and terms and conditions of the grants.
We contracted with the independent certified public accounting firm of Kearney & Company (Kearney) to audit the consolidated financial statements of the Corporation for National and Community Service (Corporation) as of September 30, 2011 and 2010, and for the years then ended. The contract required that the audit be performed in accordance with generally accepted government auditing standards.
Attached is the Independent Auditor's Report on the Fiscal Year 2011 National Service Trust Schedule of Financial Position, and the related schedules of Operations and Changes in Net Position, Budgetary Resources and Trust Obligations (Schedules). We contracted with the independent certified public accounting firm of Kearney & Company (Kearney) to audit the financial statements of the Corporation as of September 30, 2011 and 2010, and for the years then ended. The contract required that the audit be performed in accordance with generally accepted government auditing standards.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation) contracted with Richard S. Carson & Associates, Inc. (Carson) to perform a Fiscal Year (FY) 2011 independent Federal Information Security Management Act (FISMA) evaluation of the Corporation's information technology systems, controls, and policies. The objectives of the evaluation were to:
- Determine the efficiency and effectiveness of the Corporation's information security policies, procedures, and practices
- Review network/system security of a representative subset of the Corporation's systems
- Assess the Corporation's compliance with FISMA and related information security
- policies, procedures, standards, and guidelines
- Assess the Corporation's progress in correcting weaknesses identified in prior-year
- FISMA evaluations
- Evaluate personally identifiable information (PII) protection and physical controls at field office sites
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation) performed the Audit of Earned Education Awards Resulting from Compelling Personal Circumstances to determine whether the AmeriCorps members exited the program based on a valid compelling personal circumstance (CPCs) justification according to Title 45 of the Code of Federal Regulations (C.F.R.) § 2522.230. Additionally, we evaluated whether the AmeriCorps programs maintained adequate supporting documentation to validate the CPC. We also assessed the Corporation's internal controls surrounding the CPC's review and authorization process. Based on our results, we noted a wide-spread noncompliance for 75 percent of our tested population, resulting in total questioned costs of $328,574, of which $120,352 was identified as improper payments.
The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), conducted a performance audit of the World Won Development Center's Fitting Back In program. The scope of the audit included Volunteers in Service to America (VISTA) grants awarded to the World Won Development Center's Fitting Back In program. Subsequent to the initial grant award, Fitting Back In received authorization to operate as a 501(c)(3) organization independent of World Won Development Center and World Won For Christ Outreach Ministries. Hereafter, we will refer to the grantee as Fitting Back In. The objectives of the audit were to determine whether Fitting Back In's (1) financial, grant and program management were compliant with the requirements of its American Recovery and Reinvestment Act (ARRA) and non-ARRA VISTA grants; (2) VISTA members, and the programs for grants awarded under ARRA and non-ARRA VISTA grants were compliant with applicable laws, regulations, and grant provisions; and (3) internal controls were effective.