Big Brothers Big Sisters of Colorado, Inc.

Federal Agency: U.S. Department of Justice Federal Program and Assistance Listing Number: Juvenile Mentoring Program, 16.726 Identification Number: 15PJDP-22-AG-04915-MENT Grant Period: October 1, 2022 – December 31, 2023

2023-002 Allowable Costs/Cost Principles – Material Weakness in Internal Control over Compliance

Criteria and Condition: According to Title 2 U.S Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), section 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed; significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges based on budget estimates. All personnel salary or wages through July 2023 were based on budget estimates as documented in the approved grant budget for personnel costs and fringe benefit costs related to the OJ5 grant. However, there was no evidence of an after-the-fact review to determine that the distribution accurately reflected the work performed by the employee.

Cause: For all employees who charged time to the grant, BBBSC requires that timesheets be completed with each pay-period that support the disbursement of the wages. However, from October 2022 through July 2023, BBBSC was using the budgeted personnel costs and fringe benefit costs to request reimbursements related to the OJ5 grant. Instead of basing the requests on actual time incurred related to the grant, BBBSC was using the percentage of time from the budget and multiplying it by the total compensation for each pay period for each employee allocated to the grant.

Effect: When adequate support is not obtained and used to support the amount charged to the federal program or supported by an after-the-fact review, there is a risk that unsupported or inaccurate costs are being charged to the federal program.

Context: When evaluating internal controls for OJ5 grant personnel expenses, it was determined that management used budgeted amounts for the majority of the year’s reimbursement requests, instead of actual costs.

Questioned Costs: Known questioned costs total $286,676.

Identification of Repeat Findings: This is not a repeat finding.

Recommendation: Proper control activities should be implemented to allow for a consistent, accurate, and allowable method to support distribution of personnel charges to federal programs. If management elects to continue to allocate personnel charged based on a budget estimate, the after-the-fact review should be properly documented.

Views of Responsible Officials and Planned Corrective Actions: As of August 2023, BBBSC implemented controls that properly support the distribution of personnel charges in accordance with the Uniform Guidance and employees’ salaries charged to the grant are based on actual costs incurred. Further, these charges are reviewed by the Director of Finance before federal reimbursements are requested.

Federal Agency: U.S. Department of Justice Federal Program and Assistance Listing Number: Juvenile Mentoring Program, 16.726 Identification Number: 15PJDP-22-AG-04915-MENT Grant Period: October 1, 2022 – December 31, 2023

2023-003 Procurement and Suspension and Debarment – Significant Deficiency in Internal Control over Compliance

Criteria and Condition: BBBSC must document their procurement process in writing, comply with applicable state and local laws and regulations, and conform to applicable federal statutes and procurement requirements identified in 2 CFR part 200. In addition, BBBSC is prohibited from contracting with parties that are suspended or debarred. Under the guidelines, before contracting with a non-federal entity, the grantee must verify that the non-federal entity is not suspended, debarred, or otherwise excluded from participating in the transaction.

Cause: While policies and procedures were in place and documented in accordance with the Uniform Guidance, the method used by management to procure new services under U.S. Department of Justice funding did not follow all of the required elements. During the course of the audit, it was noted that the appropriate staff check vendors prior to entering into a covered transaction to determine if the vendor is debarred, suspended, or otherwise excluded, but there was no documentation evidencing that verifications were being completed.

Effect: Without following all of the required elements within the written procurement policy, procurements under federal awards may not have been made in compliance with applicable Federal regulations, and covered transaction payments could have been made to parties that were federally suspended, debarred, or otherwise disqualified.

Context: Program expenditures made to certain vendors exceeded either the micro-purchase or covered transaction threshold, triggering the testing of this compliance area during the audit.

Questioned Costs: This finding did not result in any questioned costs.

Identification of Repeat Findings: This is not a repeat finding.

Recommendation: We recommend BBBSC enhance their internal control processes to include all required elements by the Uniform Guidance. Procedures should be included that outline processes and control activities specifically defining oversight of contractors’ performance, which personnel are responsible for each step in the process and who is performing the review over the process, including conflicts of interest and who is responsible for ensuring vendors under covered transactions are not suspended, debarred, or otherwise disqualified.

Views of Responsible Officials and Planned Corrective Actions: BBBSC has updated their procedures to ensure that all required elements under their procurement policy are clearly documented in accordance with Uniform Guidance. Full implementation will occur no later than March 31, 2024.

Federal Agency: U.S. Department of Justice Federal Program and Assistance Listing Number: Juvenile Mentoring Program, 16.726 Identification Number: 15PJDP-22-AG-04915-MENT Grant Period: October 1, 2022 – December 31, 2023

2023-004 Subrecipient Monitoring – Significant Deficiency in Internal Control over Compliance

Criteria and Condition: Established subrecipient monitoring policies were not followed with regard to documenting the annual review over subrecipient activities.

Cause: Management did not document their annual review of subrecipient activities as required by the Uniform Guidance.

Effect: Not requesting a copy of the annual subrecipient audit or following up on issues identified may result in misuse of grant funds that may not be identified and corrected on a timely basis.

Context: The Uniform Guidance requires that subrecipient activities be monitored, including that subrecipients take timely and appropriate action on all deficiencies pertaining to the award that are detected through audits, on site review, and other means.

Questioned Costs: This finding did not result in any questioned costs.

Identification of Repeat Findings: This is not a repeat finding.

Recommendation: We recommend management ensure proper internal control procedures are in place for effective subrecipient monitoring and to document their annual review process.

Views of Responsible Officials and Planned Corrective Actions: BBBSC is in the process of updating subgrantee monitoring control procedures necessary to ensure the highest level of transparency and accountability, and to avoid any potential misuse of grant funds. Annual review of subgrantee activities by BBBSC will be documented in a permanent file.