jurisdiction: US

text: b' Office of Inspector General\n Corporation for National and\n Community Service\n\n\n\n\nAUDITOF CORPORATION\n FOR NATIONAL\n AND\n COMMUNITY\n SERVICEGRANTS\n AWARDED\n TO THE\n RHODEISLANDSERVICEALLIANCE\n\n OIG REPORT 04-22\n NUMBER\n\n\n\n Cornoration for a\n\n\n NATIONAL\n COMMUNITY\n SERVICE-\n\n\n\n\n Prepared by:\n\n Leonard G. Birnbaum and Company\n 6285 Franconia Road\n Alexandria, Virginia 22310\n\n\n\n\nThis report was issued to Corporation management on September 23, 2004.\nUnder the laws and regulations governing audit follow-up, the Corporation is to\nmake final management decisions on the report\'s findings and\nrecommendations no later than March 23, 2004, and complete its corrective\nactions by September 23, 2005. Consequently, the reported findings do not\nnecessarily represent the final resolution of the issues presented.\n\x0c Office of Inspector General\n Corporation for National and Community Service\n Audit Report 04-22\n\nAudit of Corporation for National and Community Service Grants Awarded to the Rhode Island\n Service Alliance\n\nOIG Summary\n\nThe Office of Inspector General (OIG), Corporation for National and Community Service\n(Corporation), retained Leonard G. Birnbaum and Company to perform an incurred-cost audit of\ngrants awarded to the Rhode Island Service Alliance (RISA). The objectives of the audit were to\ndetermine whether:\n\n financial reports prepared by RISA presented fairly the financial results of the awards;\n\n internal controls were adequate to safeguard Federal funds;\n\n The RISA and its subrecipients had adequate procedures and controls to ensure\n compliance with Federal laws, applicable regulations, and award conditions, and that\n member performed service appropriate for the programs;\n\n award costs reported to the Corporation were documented and allowable in accordance\n with the award terms and conditions; and\n\n The RISA had established adequate oversight and informed subrecipients of the\n Corporation\'s Government Performance and Results Act (GPRA) goals.\n\nFor the grants audited, the Commission claimed costs of $7,939,976, of which the auditors\nquestioned $148,959 of unallowable claimed costs and $32,850 of education awards. Overall,\nthe auditors questioned less than two percent of claimed costs. Costs questioned for allowability\nrepresent amounts for which documentation shows that recorded costs were expended in\nviolation of regulations or specific award conditions, or costs that require an interpretation of\nallowability. The auditors also noted instances of noncompliance with provisions of Federal\nlaws, regulations and grant award provisions. These instances of noncompliance are considered\ncollectively to be a material weakness. In addition, the auditors noted one internal control\nfinding that is considered to be a material weakness.\n\nThe Commission does not agree with the audit report\'s conclusion that the noncompliance\nfindings and internal control finding are material weaknesses. The RISA disagrees with the\nauditors\' interpretation of grant provisions and whether RISA7spolicies, procedures and\npractices meet the requirements of the provisions. These comments and RISA7scorrective\nactions will be reviewed by the Corporation as part of the audit resolution process.\n\x0cThe Office of Inspector General has reviewed the report and the work papers supporting the\nauditors\' conclusions. Our review of the auditors\' work papers disclosed no instances where\nLeonard G. Birnbaum and Company did not comply, in all material respects, with generally\naccepted government auditing standards.\n\x0c Audit of Corporation for National and Community Service\n Grants Awarded to\n Rhode Island Service Alliance\n Providence, RI\n\n Table of Contents\n\n\n\nREPORT SUMMARY AND HIGHLIGHTS\n\n Results in Brief ............................................................................................................... 1\n\n Grant Programs Audited ................................................................................................ .2\n\n Costs Questioned ............................................................................................................ 2\n\n Compliance .................................................................................................................... .3\n\n Internal Controls .............................................................................................................4\n\n Purpose and Scope of Audit ............................................................................................ 4\n\n Background .................................................................................................................... .5\n\n\nINDEPENDENT AUDITOR\'S REPORT ................................................................................. .7\n\nFINANCIAL SCHEDULES\n\n Consolidated Schedule of Award Costs ........................................................................ ..9\n\n Exhibit A - Schedule of Award Costs:\n AmeriCorps ............................................................................................... .12\n\n Schedule A-1 - Schedule of Award Costs:\n City Year, Inc. .......................................................................... 13\n\n Schedule A-2 - Schedule of Award Costs:\n Children\'s Crusade For Higher Education. ..........................16\n Schedule A-3 - Schedule of Award Costs:\n Public Education Funds .......................................................... .18\n Schedule A-4 - Schedule of Award Costs:\n International Gallery For Culture & Heritage .........................2 1\n\x0c Table of Contents - continued\n\n &\n Exhibit B - Schedule of Award Costs:\n Learn & Serve (L&S) ................................................................................23\n Exhibit C - Schedule of Award Costs:\n Program Development and Training (PDAT) .......................................... .24\n\n Exhibit D - Schedule of Award Costs:\n Administrative .......................................................................................... .25\n\n\nCOMPLIANCE AND INTERNAL CONTROLS\n\n Independent Auditor\'s Report on Compliance and Internal Controls\n Over Financial Reporting ..................................................................................26\n Compliance Findings ....................................................................................... .27\n\n Internal Control Findings .................................................................................. 39\n\n Follow-up on Pre-Audit Survey Findings. ....................................................... 41\n\nRESPONSES TO REPORT\n\n Rhode Island Service Alliance ..................................................................... Appendix A\n\n Corporation for National and Community Service ....................................... Appendix B\n\x0cREPORT SUMMARY AND HIGHLIGHTS\n\x0c L E O N A R D G. B I R N B A U M AND COMPANY, LLP\n CERTIFIED PUBLIC ACCOUNTANTS\n WASHINGTON OFFICE\n 6285 FRANCONIA ROAD\n ALEXANDRIA, VA 22310-2510\n -\n\n (703) 922-7622\n FAX: (703) 922-8256\nLESLIE A. LEIPER WASHINGTON, D.C.\n\nLEONARD G. BIRNBAUM SUMMIT. NEW JERSEY\n\nDAVID SAKOFS REDWOOD CITY, CALIFORNIA\n\nCAROL A. SCHNEIDER\nDORA M . CLARKE\n\n\n\n\n Office of Inspector General\n Corporation for National and Community Service\n\n\n This report is issued under an engagement to audit the costs claimed by the Rhode Island Service\n Alliance (RISA) and its subrecipients from July 1, 2000, through December 3 1, 2003, under the\n grants awarded by the Corporation for National and Community Service (Corporation). This\n report focuses on the audit of claimed costs, instances of noncompliance with Federal laws,\n applicable regulations or award conditions, and internal control weaknesses disclosed during the\n audit of RISA and its subrecipients.\n\n\n Results in Brief\n\n As a result of our audit, we are questioning costs totaling $1 81,539, or approximately 2.3 percent\n of the total $7,939,976 in costs claimed by RISA. Questioned costs are costs for which there is\n documentation that the recorded costs were expended in violation of the law, regulations or\n specific conditions of the award, or those costs which require additional support by the grantee or\n require interpretation of allowability by the Corporation. Of these questioned costs, $32,580\n relate to Education Awards. Other costs questioned include excess living allowance charges,\n living allowances questioned because key eligibility documentation could not be located, the\n impact of recorded training hours in excess of Corporation grant limitations, miscellaneous\n reclassifications and adjustments, and related administrative expenses. Details related to\n questioned costs appear in the Independent Auditor\'s Report.\n\n\n\n\n MEMBERS O F THE AMERICAN INSTITUTE O F CERTIFIED PUBLIC ACCOUNTANTS\n\x0c Grant Programs Audited\n\nOur audit of RISA covered financial transaction, compliance and internal controls testing of the\nfollowing program awards funded by the Corporation:\n\n Program Award Number Award Period Audit Period\nAmeriCorps 00ASCRI04 1 8/1/00 to 9/30/03 8/1/00 to 9/30/03\nAmeriCorps 00ASFRI04 1 7/1/00 to 9/30/03 7/1/00 to 9/30/03\nLearn & Serve 00LCSRI040 9/1/00 to 12131/03 9/1/00 to 12131/03\nAmerica\'s Promise 99APSRI068 10/1/00 to 12/21/01 10/1/00 to 12/21/01\nAmerica\'s Promise 0 1APSRIO68 10/15/01 to 10/14/04 10/15/01 to 12/31/03\nDisability Funds 00DSCRI039 1/1/01 to 12/31/03 1/1/01 to 12/31/03\nEducation Awards 01EDSRI023 1/1/03 to 12/31/03 1/1/03 to 12/31/03\nPDAT 95PDSRIA39 1/1/95 to 12/31/01 1/1/01 to 12/31/01\nPDAT 02PDSRIA39 1/1/02 to 12/31/02 1/1/02 to 12/31/02\nPDAT 03PTHRI00 1 1/1/03 to 12/31/03 1/1/03 to 12/31/03\nAdministrative OlSCSRIA39 1/1/01 to 12/31/03 1/1/01 to 12/31/03\n\nOur audit of the costs claimed by RISA under these awards disclosed the following:\n\n Percentage of\n Amount BudaetIClaimed\nAward Budget $ 8,787,605 -\nClaimed Costs $ 7,939,976 90.3 percent\nQuestioned Costs (Incl. Ed. Awards) $ 181,539 2.3 percent\n\n Costs Questioned\n\nThe following summarizes the costs questioned on these awards:\n\nAmeriCorps Grant\n\n AmeriCorps Member Compliance Issues\n Members\' Training Costs in Excess of 20 Percent Ceiling\n Living Allowance Payments in Excess of Limits\n Questioned Staff Salaries (Net)\n Administrative Costs Related to Costs ~uestioned\'\n Subtotal Costs Questioned\n Education Awards\n\n1 Administrative costs questioned pertain to only those subrecipients that had claimed administrative costs at the 5\npercent ceiling level. Administrative costs at some subrecipients exceeded the 5 percent ceiling for individual\nprogram years. These costs are identified elsewhere as noncompliance issues rather than costs questioned in\naccordance with the guidance in the Office of Inspector General (OIG) Full Scope Audit Program.\n\x0c Total Costs Questioned - AmeriCorps\n\nOur audit disclosed certain questionable costs and/or misclassifications in other Corporation\ngrant programs performed by RISA, which were de minimis in amount.\n\nIn most cases, we used a random sampling method to test the costs claimed. Based upon this\nsampling plan, questioned costs in this report may not represent total costs that may have been\nquestioned had all expenditures been tested. In addition, we have made no attempt to project\nsuch costs to total expenditures incurred, based on the relationship of costs tested to total costs.\nFor a complete discussion of these questioned costs, refer to the Independent Auditor\'s Report.\n\n Compliance\n\nOur audit disclosed the following instances of noncompliance with Federal laws, applicable\nregulations and award conditions:\n\n 1. The RISA did not submit Federal Cash Transaction Reports on a timely basis.\n 2. The RISA Financial Management System was not maintained in accordance with\n grant provisions.\n 3. Non-allocable costs were charged to the PDAT grant.\n 4. The RISA timekeeping system is not in accordance with OMB Circular A-122.\n 5. Some subrecipients paid living allowances in excess of authorized amounts.\n 6. Some subrecipients incurred more time for training of AmeriCorps members than\n AmeriCorps provisions allow.\n 7. A subreceipient did not maintain matching cost records in accordance with\n AmeriCorps provisions.\n 8. Some subrecipients did not maintain adequate documentation for AmeriCorps\n member eligibility.\n 9. Two subrecipients exceeded the administrative cost maximum of 5 percent of total\n costs.\n 10. Some AmeriCorps member files were missing required documentation.\n I I . Some subrecipients included training for the high school equivalency exam in the\n service time of AmeriCorps members.\n\nThese findings are collectively considered to be a material ~ e a k n e s s . ~\n\n\n\n\n2 A material weakness is a reportable condition in which the design or operation of one or more of the internal\ncontrol components does not reduce to a relatively low level the risk that errors or irregularities in amounts, which\nwould be material to the financial schedules being audited, may occur and not be detected within a timely period by\nemployees in the normal course of performing their assigned functions.\n\x0c Internal Controls\n\nOur audit disclosed several weaknesses in RISA\'s internal controls. The RISA\'s financial\nmanagement system does not have an adequate disasterhack-up plan. In addition, finding Nos.\n1 through 7, and finding No. 9, as set forth in the Compliance section of the report, are also\nconsidered a finding on internal control.\n\n Purpose and Scope of Audit\n\nOur audit covered the costs claimed under Corporation Grant Nos. 00ASCRI041,00ASFRI041,\n00LCSRI040,99APSRI068,01APSRI068,00DSCRI039,01EDSRI023,95PDSRIA39,\n02PDSRIA39,03PTHRI001, and 01 SCSRIA39.\n\nThe principal objectives of our audit were to determine whether:\n\n financial reports prepared by RISA presented fairly the financial results of the\n awards;\n\n internal controls were adequate to safeguard Federal funds;\n\n RISA and its subrecipients had adequate procedures and controls to ensure\n compliance with Federal laws, applicable regulations, award conditions, and that\n member services were appropriate to the programs;\n\n award costs reported to the Corporation were documented and allowable in\n accordance with the award terms and conditions; and\n\n RISA had established adequate oversight and informed subrecipients of the\n Corporation\'s Government Performance and Results Act (GPRA) goals.\n\nWe performed the audit in accordance with auditing standards generally accepted in the United\nStates of America and Government Auditing Standards issued by the Comptroller General of the\nUnited States. Those standards require that we plan and perform the audit to obtain reasonable\nassurance about whether the amounts claimed against the awards, as presented in the\nConsolidated Schedule of Award Costs and the grant-specific Schedules of Award Costs\n(Exhibits A through D), are free of material misstatement. An audit includes examining, on a\ntest basis, evidence supporting the amounts and disclosures in Exhibits A through D. An audit\nalso includes assessing the accounting principles used and significant estimates made by the\nauditee, as well as evaluating the overall financial schedule presentation. Our audit included\nreviews of audit reports and working papers prepared by the independent public accountants for\nthe RISA and its subrecipients in accordance with the requirements of OMB Circular A-133,\nAudits of States, Local Governments and Non-profit Organizations. Our audit also followed up\non the findings and recommendations in the Pre-Award Survey Report of RISA dated January\n 11, 2000 (CNS OIG Report 00-26). We believe our audit provides a reasonable basis for our\nopinion.\n 4\n\x0cWith regard to GPRA, AmeriCorps grantees and subrecipients provide progress reports that are\nmaintained in the Web-Based Reporting System (WBRS). The Corporation develops program\nreporting guidelines that cascade from its Federal reporting requirements. The RISA does not\nmake continuation grants available to subrecipients that do not meet program objectives, unless\nextenuating circumstances prevented the subrecipient from meeting its objectives. Evaluation\nreports from consultants are utilized to monitor and assess program accomplishments. In\nsummary, the process appears to be operating as intended. The RISA is interested in obtaining\nuseful reports from its subgrantees to forward to the Corporation. The evaluation consultant\njudges the adequacy of information reported on goal accomplishment. The RISA takes\ncorrective action on identified reporting deficiencies.\n\nThe contents of this report were disclosed to and discussed with RISA at an exit conference on\nJuly 14, 2004. In addition, we provided a draft of this report to RISA and to the Corporation for\ncomment on July 22, 2004, and received responses from both RISA and the Corporation on July\n19 and July 23, 2004, respectively. Their responses are included in their entirety as appendices\nA and B, respectively.\n\n\n\n\nThe Corporation, pursuant to the authority of the National and Community Service Act, as\namended, awards grants and cooperative agreements to State commissions such as RISA and\nother entities to assist in the creation of full-time and part-time national and community service\nprograms.\n\nThe Rhode Island Commission for National and Community Service (the Commission) is a\nnonprofit corporation created by an act, incorporating the Rhode Island Commission for National\nand Public Service, which was enacted by the Rhode Island General Assembly at its January\n1994 session. The Commission began operations in October 1994. The Commission is exempt\nfrom Federal and State income taxes as a public charity under Section 501(c)(3) of the Internal\nRevenue Code. The Commission is headquartered in Providence, Rhode Island. It is known in\nthe community as the Rhode Island Service Alliance (RISA) and has registered this name as a\n"fictitious" name with the Rhode Island Secretary of State.\n\nThe Commission\'s primary purpose is to carry out, on behalf of the State of Rhode Island, the\nobjectives of the National and Community Service Trust Act of 1993 and for such other\ncharitable and educational purposes as are within the meaning of Section 501(c)(3) of the\nInternal Revenue Code.\n\nThe RISA has received approximately $8.7 million in funding and exercised $7.9 million in\ndrawdowns from Corporation funds since 2001, including AmeriCorps Formula Funds,\nAmeriCorps Competitive Funds, Learn & Serve Funds, Disability Funds, Education Award\nFunds, PDAT Funds, and Administrative Funds. Of this amount, approximately $6.9 million\nwas distributed to subrecipients. The majority of RISA\'s subrecipients are State entities or\nnonprofit organizations.\n\x0cAs of December 31, 2003, RISA had received funding fkom the Corporation for various\nprograms within the scope of this engagement in the amount of $8,787,605. The majority of this\namount has been subgranted to numerous entities to carry out community service programs. A\nbrief synopsis of the programs follows:\n\n Funding Claimed within Drawdowns\n Authorized Audit Period During Audit Period\n\n00ASCRI041 - AmeriCorps - Competitive $ 5,313,726 $ 5,130,599 $ 4,955,582\n00ASFRI041 - AmeriCorps - Formula\n Total ArneriCorps Funds\n\n00LCSRI040 - Learn & Serve\n\n99APSRI068 - America\'s Promise\n01APSRI068 - America\'s Promise\n Total America\'s Promise Funds\n\n00DSCRI039 - Disability Funds\n\n0 1EDSRI 023 - Education Awards\n\n95PDSRIA39 - PDAT\n02PDSRIA39 - PDAT\n03PTHRI001- PDAT\n Total PDAT Funds\n\n0 1SCSRIA39 Administrative Funds\n\nTOTALS - Grants Administered\n by RISA\n\n"The differences between the amount claimed and amount drawndown are generally due to\ntiming issues.\n\n\n Report Release\n\nThis report is intended for the information and use of the Office of Inspector General,\nmanagement of the Corporation for National and Community Service, the Rhode Island Service\nAlliance and its subrecipients, and the U.S. Congress. However, this report is a matter of public\nrecord and its distribution is not limited.\n\x0c LEONARD G . BIRNBAUM AND COMPANY, L L P\n CERTIFIED PUBLIC ACCOUNTANTS\n WASHINGTON OFFICE\n 6285 FRANCONIA ROAD\n ALEXANDRIA, VA 22310-2510\n\n\n (703) 922-7622\n FAX: (703) 922-8256\nLESLIE A. LEIPER WASHINGTON. D.C.\n\nLEONARD G . BIRNBAUM SUMMIT, NEW JERSEY\n\nDAVID SAKOFS REDWOOD CITY, CALIFORNIA\n\nCAROL A. SCHNEIDER\nDORA M. CLARKE\n\n\n\n Office of Inspector General\n Corporation for National and Community Service\n\n INDEPENDENT AUDITOR\'S REPORT\n\n We have audited the costs incurred by the Rhode Island Service Alliance (RISA) for the award\n numbers listed below. These costs, as presented in the Consolidated Schedule of Award Costs\n and the grant-specific Schedules of Award Costs (Exhibits A through D) are the responsibility of\n RISA\'s management. Our responsibility is to express an opinion on the consolidated Schedule\n of Award Costs and Exhibits A through D based on our audit.\n\n Program Award Number Award Period Audit Period\n AmeriCorps 00ASCRI04 1 8/1/00 to 9/30/03 8/1/00 to 9/30/03\n AmeriCorps 00ASFRI04 1 7/1/00 to 9/30/03 7/1/00 to 9/30/03\n Learn & Serve 00LCSRI040 9/1/00 to 12131/03 9/1/00 to 12131/03\n America\'s Promise 99APSRI068 10/1/00 to 12/21/01 10/1/00 to 12/21/01\n America\'s Promise 0 1APSRIO68 10/15/01 to 10/14/04 10/15/01 to 12/31/03\n Disability Funds 00DSCRI039 1/1/01 to 12/31/03 1/1/01 to 12/31/03\n Education Awards 0 1EDSRI023 1/1/03 to 12/31/03 1/1/03 to 12/31/03\n PDAT 95PDSRIA39 1/1/95 to 12/31/01 1/1/01 to 12/31/01\n PDAT 02PDSFUA39 1/1/02 to 12/31/02 1/1/02 to 12/31/02\n PDAT 03PTHRI00 1 1/1/03 to 12/31/03 1/1/03 to 12/31/03\n Administrative 01 SCSRIA39 1/1/01 to 12/31/03 1/1/01 to 12/31/03\n\n We conducted our audit in accordance with auditing standards generally accepted in the United\n States of America and Government Auditing Standards, issued by the Comptroller General of the\n United States. Those standards require that we plan and perform the audit to obtain reasonable\n assurance about whether the financial schedules are free of material misstatement. An audit\n includes examining, on a test basis, evidence supporting the amounts and disclosures in the\n financial schedules. An audit also includes assessing the accounting principles used and\n significant management estimates, as well as evaluating the overall financial schedule\n presentation. We believe our audit provides a reasonable basis for our opinion.\n\n\n\n\n MEMBERS O F THE AMERICAN INSTITUTE O F CERTIFIED PUBLIC ACCOUNTANTS\n\x0cIn our opinion, except for the omission of the supporting source documentation related to the\n$181,539 in questioned costs discussed above, the Consolidated Schedule of Award Costs and\nthe grant-specific Schedules of Award Costs (Exhibits A through D and related Schedules)\nreferred to above present fairly, in all material respects, the costs claimed for the period July 1,\n2000, to December 3 1, 2003, in conformity with generally accepted accounting standards in the\nUnited States of America.\n\nIn accordance with the Government Auditing Standards, we have also issued our report, dated\nJune 30, 2004, on compliance and on internal controls over financial reporting.\n\nThis report is intended for the information and use of the Corporation for National and\nCommunity Service\'s Office of Inspector General, management of the Corporation for National\nand Community Service, the Rhode Island Service Alliance and its subrecipients, and the U.S.\nCongress. However, this report is a matter of public record and its distribution is not limited.\n\n\n\n\nLeonard G. Birnbaum and company, ~ L P\nAlexandria, Virginia\nJune 30,2004\n\x0c Rhode Island Service Alliance\n Consolidated Schedule of Award Costs\n\n\n Corporation for National and Community Service Awards\n\n\n\n Questioned\n Approved Claimed Questioned Education\nAward Number Program Budget Costs Costs Awards Reference\n\n00ASCRI041 AmeriCorps $ 5,313,726 $ 5,130,599 $ 128,000 $ 21,263\n00ASFRI04 1 AmeriCorps 1,549.105 1,318,556 20.959 11,317\n\n Total AmeriCorps 6,862,83 1 6,449,155 148,959 32,580 Exhibit A\n\n00LCSRI040 Learn & Serve 705.000 705,000 - Exhibit B\n\n99APSRI068 America\'s Prom. 133,000\n0 lAPSRI068 America\'s Prom. 69,000\n\n Total America\'s Promise 202,000 - N/A\n\n00DSCRI039 Disability Funds 74,000 40,300\n\n01EDSRI023 Educ. Awards 172,000 - N/A\n\n95PDSRL439 PDAT 101,000 101,000\n02PDSRIA39 PDAT 111,000 111,000\n03PTHRI00 1 PDAT 103,000 103,000\n\n Total PDAT Funds 3 15.000 3 15,000 - Exhibit C\n\n\n0 1SCSRIA39 Administrative 456,774 430,521 - Exhibit D\n\n Totals $ 8,787.605 $ 7.939.976 $ 148.959 $ 32?580\n\x0c Rhode Island Service Alliance\n Notes to Consolidated Schedule of Award Costs\n\n\n1. Summarv of Significant Accounting Policies\n\n\nReporting Entity\n\nThe accompanying consolidated Schedule of Award Costs includes amounts budgeted, claimed,\nand questioned under AmeriCorps, Administrative, Program Development and Training and\nother grants awarded to the Rhode Island Service Alliance (RISA) by the Corporation for\nNational and Community Service (Corporation) for the period from July 1, 2000, to December\n31,2003.\n\nThe RISA awards its AmeriCorps grant funds to numerous subrecipients that administer the\nAmeriCorps program and report financial and programmatic results to RISA.\n\n\nBasis of Accounting\n\nThe accompanying Schedule has been prepared to comply with the provisions of the grant\nagreements between the Corporation and RISA. The information presented in the Schedule has\nbeen prepared from the reports submitted by RISA to the Corporation. The basis of accounting\nused in preparation of these reports differs slightly from accounting principles generally accepted\nin the United States of America as follows:\n\n Equipment\n\nEquipment is charged to expense in the period during which it is purchased instead of being\nrecognized as an asset and depreciated over its useful life. As a result, the expenses reflected in\nthe Schedule of Award Costs include the cost of equipment purchased during the period rather\nthan a provision for depreciation. The equipment acquired is owned by RISA while used in the\nprogram for which it was purchased or in other future authorized programs. However, the\nCorporation has a reversionary interest in the equipment. Its disposition, as well as the\nownership of any proceeds therefrom, is subject to Federal regulations.\n\n\n Inventory\n\nMinor materials and supplies are charged to expense during the period of purchase.\n\x0c Questioned Costs\n\nQuestioned costs are costs for which there is documentation that the recorded costs were\nexpended in violation of laws, regulations or specific conditions of the awards, or those costs\nwhich require additional support by the grantee, or costs which require interpretation of\nallowability by the Corporation.\n\x0c Exhibit A\n\n\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation for National and Community Service\n Award Numbers 00ASCRI041 and 00ASFRI041 (AmeriCorps)\n July 1,2000, to December 31,2003\n Questioned\n Claimed Questioned Education\nDetailed Audits of AmeriCorps Costs Claimed Costs Awards Reference\nSubrecipients\n\n\nCity Year, Inc. $2,423,449 $ 42,713 $ 4,725 Schedule A-1\n\nChildren\'s Crusade For\nHigher Education - Schedule A-2\n\nPublic Education Funds -\nParents Making a Difference 1,093,710 80,843 16,538 Schedule A-3\n\nInternational Gallery For\nCulture & Heritage 1,095,833 20,959 11,317 Schedule A-4\n\nTotal - Detailed Audits $5.765.530 $ 148.959 $ 32,580 Note 1\n\n\n\n\nNotes\n\n1. The total claimed costs reported include costs claimed by subrecipients that were not tested\n as part of this audit. During the period covered by our audit, RISA had 12 AmeriCorps\n program subrecipients. Accordingly, we used a sampling approach at the selected field sites\n to test the costs claimed for Program Years 2000-01 to 2002-03.\n\x0c Schedule A-1\n Page 1 of 3\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation for National and Community Service\n Award Number 00ASCRI041\n August 1,2000, to September 30,2003\n\n City Year, Inc. (CYI)\n\n Reference\n\nApproved Budget (Federal Funds - 3 Years) Note 1\nClaimed Costs Note 2\nQuestioned Costs\n Member Compliance Issues Note 3\n Excess Training Costs Note 4\n Excess Living Allowance Charges Note 5\n Staff Salaries Note 6\n Administrative Costs Note 7\nTotal Questioned Costs\n\nQuestioned Education Award Note 8\n\n\nNotes\n1. The amount shown above as Approved Budget represents the total gross funding to City Year,\n Inc. (CYI) for Program Years 2000-01 to 2002-03, according to the budget schedules for the\n RISA grants.\n2. Claimed costs represent CYI\'s reported expenditures for the program year., tested (2000-01\n through 2002-03).\n3. Compliance testing of AmeriCorps member files revealed that key eligibility documentation for\n some members was missing. Since member eligibility could not be validated through\n supporting source documentation in some cases, we questioned the claimed member living\n allowances, including FICA, associated with the unsupported/ineligible members. Questioned\n costs are summarized by type of missing documentation as follows:\n\x0c Schedule A-1\n Page 2 of 3\n\n Program Year Missing Documentation Amount\n 2000-01 Missing ContractICriminal Check $ 944\n 2000-02 Missing Contract 2,966\n 2000-03 Support For Residency Status 5,242\n\n Total Eligibility Issues Questioned (includes FICA) $ 9,152\n\n4. ArneriCorps Special Provision 7(e) limits to 20 percent the aggregate amount of member service\n hours that can be spent on education and training activities. City Year exceeded this aggregate\n limitation in each year audited. We questioned members\' living allowances, including FICA,\n related to this condition as follows:\n\n Program Year Amount\n 2000-0 1 $ 10,088\n 2000-02 9,876\n 2000-03 7,577\n\n Total Training Charges Questioned $ 27.541\n\n5. Costs questioned represent member living allowance payments charged to the grants that\n exceeded the program year(s) limits. We questioned members\' living allowances, including\n FICA, related to this condition as follows:\n\n Program Year Amount\n 2000-0 1 $ -\n 2000-02 315\n 2000-03 97\n\n Total Costs Questioned $ 412\n\n6. We questioned staff salaries because of an unsupported adjustment to the salary allocation of the\n Executive Director in program year 2002-03. The amount of the questioned adjustment is\n $3,447, including FICA.\n\n7. We questioned $2,161 in administrative costs because CYI claimed an administration\n percentage on the questioned costs in notes 3,4, 5 and 6 above.\n\x0c Schedule A-1\n Page 3 of 3\n\n8. We questioned an education award of $4,725 because of member eligibility issues.\n\nRISA \'s Response\n\nThe RISA and CYI disagree with these questioned costs, but acknowledge that (1) member\ndocumentation was, in fact, missing from the members\' files, (2) training time exceeded the 20\npercent limit, but that such training was appropriate, (3) some stipends exceeded the program year\'s\nlimits, but were nominal, and (4) the allocation of the Executive Director\'s salary was, in fact, based\non the budgeted allocation.\n\nAuditor\'s Comment\n\nSince RISA\'s response does not provide evidence disputing the questioned costs, the CYI\nquestioned costs remain unchanged.\n\x0c Schedule A-2\n Page 1 of 2\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation for National and Community Service\n Award Number 00ASCRI041\n August 1,2000, to September 30,2003\n\n Children\'s Crusade for Higher Education (CCHE)\n\n Reference\nApproved Budget (Federal Funds - 3 Years) $ 1,256.819 Note 1\n\n\nClaimed Costs Note 2\n\n\nQuestioned Costs\n Excess Training Costs Note 3\n Staff Salaries Note 4\n\n\nTotal Questioned Costs Note 5\n\n\nNotes\n1. The approved budget amount of $1,256,819 represents total gross funding to the Children\'s\n Crusade for Higher Education (CCHE) for program years 2000-01 through 2002-03, per the\n budget schedules for RISA grants.\n2. The claimed costs of $1,252,538 represents the amount of reported expenditures of CCHE for\n the years tested (2000-01 through 2002-03).\n3. AmeriCorps Special Provision 7(e) limits to 20 percent the aggregate amount of member service\n hours that can be spent on education and training activities. The CCHE exceeded this limitation\n in program year 2000-01. The questioned members\' living allowances, including FICA, related\n to this condition are $5,883.\n\x0c Schedule A-2\n Page 1 of 2\n4. The amount shown as Costs Questioned is due to misclassifications in recording in program year\n 2000-01.\n5. The CCHE did not claim any administrative cost against Federal funds in these program years.\n All claimed administrative costs were accounted for as matching claims.\nRISA \'s Response\nThe RISA acknowledges that some subrecipients exceeded the 20 percent training time limitation,\nbut asserts that the aggregate AmeriCorps program training hours, for all subrecipients, were within\nthe limit. Based on this reasoning, RISA does not believe that this AmeriCorps Provision 7(e)\nshould be enforced.\n\nAuditov \'s Comment\n\nThe AmeriCorps Provisions stipulate that "[bly accepting funds under this Grant, the Grantee agrees\nto comply with the AmeriCorps Provisions and all applicable federal statutes, regulations and\nguidelines" The AmeriCorps Provisions also require all grantees "to include in all subgrants the\napplicable terms and conditions contained in this award." Accordingly, the provision limiting\ntraining time applies to RISA\'s subrecipients. The questioned costs remain unchanged.\n\x0c Schedule A-3\n Page 1 of 3\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation for National and Community Service\n Award Number 00ASCRI041\n August 1,2000, to September 30,2003\n\n Public Education Funds (PEF)\n Parents Making A Difference (PMAD)\n\n Reference\n\nApproved Budget (Federal Funds - 3 Years) $ 1.258.998 Note 1\nClaimed Costs $ 1,093,710 Note 2\nQuestioned Costs\n Member Compliance Issues $ 56,071 Note 3\n Excess Training Costs 22,2 14 Note 4\n Excess Living Allowance Charges 2,558 Note 5\n\nTotal Questioned Costs Note 6\nQuestioned Education Awards Note 7\n\n\nNotes\n\n1. The approved budget amount represents total gross funding to Public Education Funds (PEF)\n for program years 2000-01 through 2002-03, per the budget schedules for RISA grants.\n2. The claimed costs represent the amount of reported expenditures of PEF for the years tested\n (2000-0 1 through 2002-03).\n3. Compliance testing of AmeriCorps member files revealed that key eligibility documentation\n for some members was missing. Since member eligibility could not be validated through\n supporting source documentation in some cases, we questioned the claimed member living\n allowances, including FICA, associated with the unsupported/ineligible members.\n Questioned costs are summarized by type of missing documentation, as follows:\n\x0c Schedule A-3\n Page 2 of 3\n\n Program Year Missing Documentation Amount\n 2000-0 1 Proof of Citizenship $ 9,181\n 200 1-02 Various (Citizenship, Education,\n Criminal Record Check) 27,3 12\n 2002-03 CitizenshipIResidency Status 19,578\n\n Total Eligibility Amount Questioned (Includes FICA & Health Care) $ 56.071\n4. ArneriCorps Special Provision 7(e) limits to 20 percent the aggregate amount of member\n service hours that can be spent on education and training activities. The PEF exceeded this\n limitation in program year 2000-01. We questioned $22,214 in members\' living allowances,\n including FICA, related to this condition.\n5. Costs questioned represent member living allowance payments charged to the grants that\n exceeded the Program Year(s) limit. We questioned members\' living allowances, including\n FICA, related to this condition as follows:\n\n Program Year Amount\n 2000-01 $ 732\n 200 1-02 869\n 2002-03 957\n Total Costs Questioned $ 2.558\n\n6. In Program Years 2000-01 and 2001-02, PEF did not claim reimbursement for administrative\n costs up to the 5 percent ceiling rate. We performed an analysis of the potential\n administrative rate that could have been applied, and found that the actual rate would have\n far exceeded both the claimed rate and the ceiling rate. Consequently, any additional\n administrative costs available were claimed as matching (or were otherwise available for\n additional claims). Therefore, we did not make an adjustment for application of the\n administrative rate to the other questioned costs for this subrecipient.\n However, in program year 2002-03, due to a variety of circumstances, PEF was apparently\n advised to claim administrative costs at budget figures. This resulted in the claimed\n administrative costs exceeding the 5 percent limitation on actual costs in the amount of\n $3,006 in that year. These costs will be identified as noncompliance issues rather than as\n questioned costs.\n\x0c Schedule A-3\n Page 3 of 3\n\n7 . The questioned education awards represent the value of such awards for those members\n whose eligibility qualifications could not be validated from supporting documentation.\nRISA \'s Response\n\nPlease refer to RISA\'s response on Schedule A-1 .\n\nAuditor\'s Comment\n\nPlease refer to our comments on RISA\'s response on Schedule A-1\n\x0c Schedule A-4\n Page 1 of 2\n\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation for National and Community Service\n Award Number 00ASFRI041\n July 1,2000, to September 30,2003\n\n International Gallery For Culture & Heritage (IGCH)\n\n\n Reference\nApproved Budget (Federal Funds) $1.305.500 Note 1\n\nClaimed Costs $1.095.833 Note 2\n\nQuestioned Costs\n Member Compliance Issues $ 19,265 Note 3\n Excess Living Allowance Charges 1,694 Note 4\n\nTotal Questioned Costs Note 5\n\nQuestioned Education Awards $ 11,317 Note 6\n\nNotes\n\n1. The amount shown above as approved budget represents the total gross funding to the\n International Gallery for Culture & Heritage (IGCH) for program years 2000-01 through\n 2002-03, per the budget schedules for RISA grants.\n2. Claimed costs represent the amount of reported expenditures of IGCH for the program years\n tested (2000-0 1 through 2002-03).\n3. Compliance testing of AmeriCorps members\' files revealed that key eligibility\n documentation for some members was missing. Since member eligibility could not be\n validated through supporting documentation in some cases, we questioned the claimed\n member living allowances, including FICA, associated with the unsupported/ineligible\n members. Questioned costs are summarized by type of missing documentary support, as\n follows:\n\x0c Schedule A-4\n Page 2 of 2\n\n Program Year Missing Documentation Amount\n 200 1-02 Education $ 11,105\n 2002-03 Education 8,160\n Total Eligibility Costs Questioned $ 19.265\n\n4. Costs questioned represent member living allowance payments charged to the grants that\n exceeded the program year(s) limit. We questioned the following members\' living\n allowances related to this condition:\n\n Program Year Amount\n 200 1-02 $ 1,506\n 200 1-03 188\n\n Total Costs Questioned $ 1.694\n\n\n5. In program years 2000-01, the claimed administrative costs exceeded the 5 percent limitation\n on actual costs in the amount of $3,049. These costs will be identified as noncompliance\n issues rather than as questioned costs.\n\n6. The education awards amount questioned represents the value of awards for those members\n whose eligibility qualifications could not be validated with the supporting documentation\n provided.\n\nRISA \'s Response\n\nPlease refer to RISA\'s response to on Schedule A-1 .\n\nAuditor\'s Comment\n\nPlease refer to our comments on RISA\'s response Schedule A-1.\n\x0c Exhibit B\n\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation for National and Community Service\n Award Number 00LCSRI040 (L&S)\n September 1,2000, to December 31,2003\n\n\nLEARN & SERVE\n Reference\n\nApproved Budget (Federal Funds - 3 Years) $ 705,000 Note 1\n\nClaimed Costs $ 705,000 Note 2\n\nQuestioned Costs $ - Note 3\n\n\n\n-\nNotes\n\n1. The amount shown above as approved budget represents the total gross funding to the Learn\n & Serve (L&S) grant for the grant period, program years 2000-01 through 2002-03, per the\n budget schedules for RISA grants.\n2. Claimed costs represent the amount of reported expenditures of the L&S grant for the\n program years tested (2000-01 through 2002-03).\n\n3. A misclassification was noted during the audit. The amount involved, however, was\n considered to be insignificant.\n\x0c Exhibit C\n\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation For National and Community Service\n Award Numbers 95PDSRIA39,02PDSRIA39 and 03PTHRI001\n January 1,2000, to December 31,2003\n\nPROGRAM DEVELOPMENT and TRAINING (PDAT)\n\n Reference\nApproved Budget (Federal Funds - For the Three Year Audit Period)\n\n\n\n\nTotal Budget - 3 Years $ 315.000 Note I\n\nClaimed Costs $ 315,000 Note 2\n\nQuestioned Costs $ Note 3\n\n\nNotes\n\n1. The amount shown above as approved budget represents the total gross funding to the\n Program Development and Training (PDAT) grant for the three-year grant period, program\n years 2000-01 through 2002-03, per the budget schedules for RISA grants.\n2. Claimed costs represent the amount of reported expenditures of the PDAT grant for the\n program years tested (2000-01 through 2002-03).\n\n3. Questioned costs resulting from misclassifications and accounting corrections were noted\n during the audit, but were considered to be insignificant.\n\x0c Exhibit D\n\n Rhode Island Service Alliance\n Schedule of Award Costs\n Corporation For National and Community Service\n Award Number OlSCSRIOOl\n January 1,2001, to December 31,2003\n\n\nADMINISTRATIVE\n Reference\n\nApproved Budget (Federal Funds) $ 456.774 Note 1\n\nClaimed Costs $ 430,521 Note 2\n\nQuestioned Costs $ Note 3\n\n\nNotes\n\n1. The amount shown above as approved budget represents the total gross funding to the\n administrative grant for the grant period, per the budget schedules for RISA grants.\n2. Claimed costs represent the amount of reported expenditures of the administrative grant for\n the program years tested (2000-01 through 2002-03).\n\n3. Certain misclassifications and questionable costs were noted during the audit, but were\n considered to be insignificant.\n\x0c LEONARD G . BIRNBAUM AND COMPANY, LLP\n CERTIFIED PUBLIC ACCOUNTANTS\n WASHINGTON OFFICE\n 6285 FRANCONIA ROAD\n ALEXANDRIA. VA 22310-2510\n\n\n (703) 922-7622\n FAX: (703) 922-8256\nLESLIE A . LEIPER WASHINGTON, D.C.\n\nLEONARD G. BIRNBAUM SUMMIT. NEW JERSEY\n\nDAVID SAKOFS REDWOOD CITY, CALIFORNIA\nCAROL A. SCHNEIDER\nDORA M . CLARKE\n\n\n\n\n Office of Inspector General\n Corporation for National and Community Service\n\n\n INDEPENDENT AUDITOR\'S REPORT ON COMPLIANCE AND ON INTERNAL\n CONTROLS OVER FINANCIAL REPORTING\n\n\n We have audited the Schedules of Award Costs, as presented in Exhibits A through D, that\n summarize the claimed costs of RISA under the Corporation awards listed below, and have\n issued our report thereon, dated June 30,2004.\n\n Program Award Number Award Period Audit Period\n AmeriCorps 00ASCRI04 1 8/1/00 to 9/30/03 8/1/00 to 9/30/03\n AmeriCorps 00ASFRI04 1 7/1/00 to 9/30/03 7/1/00 to 9/30/03\n Learn & Serve 00LCSRI040 9/1/00 to 12131/03 9/1/00 to 12131/03\n America\'s Promise 99APSRI068 10/1/00 to 12/21/01 10/1/00 to 12/21/01\n America\'s Promise OlAPSRI068 10/15/01 to 10/14/04 10115/01 to 12131/03\n Disability Funds 00DSCRI039 1/1/01 to 12/31/03 1/1/01 to 12/31/03\n Education Awards 01EDSRI023 1/1/03 to 12/31/03 1/1/03 to 12/31/03\n PDAT 95PDSRIA39 1/1/95 to 12/31/01 1/1/01 to 12/31/01\n PDAT 02PDSRIA39 1/1/02 to 12/31/02 1/1/02 to 12/31/02\n PDAT 03PTHRI00 1 1/1/03 to 12/31/03 1/1/03 to 12/31/03\n Administrative OlSCSluA39 1/1/01 to 12/31/03 1/1/01 to 12/31/03\n\n We conducted our audit in accordance with auditing standards generally accepted in the United\n States of America and Government Auditing Standards, issued by the Comptroller General of the\n United States. Those standards require that we plan and perform the audit to obtain reasonable\n assurance about whether the financial schedules are free of material misstatement.\n\n\n\n\n MEMBERS O F THE AMERICAN INSTITUTE O F CERTIFIED PUBLIC ACCOUNTANTS\n\x0cCompliance\n\nCompliance with laws, regulations, and the provisions of the awards is the responsibility of\nRISA7s management. As part of obtaining reasonable assurance about whether the financial\nschedules are free of material misstatement, we performed tests of compliance with certain\nprovisions of laws, regulations, and the terms and conditions of the awards. However, our\nobjective was not to provide an opinion on overall compliance with such provisions.\n\nInstances of noncompliance are failures to follow requirements, or violations of prohibitions,\ncontained in statutes, regulations, and the award provisions. However, we noted other matters\nconcerning compliance structures and their implementation not related to reportable conditions\nthat we have reported to Corporation management in a separate letter dated July 2,2004.\nCompliance Findings\nThe results of our tests of compliance disclosed the following instances of noncompliance:\n\nFinding No. 1\n\nCondition\n\nRISA did not submit Federal Cash Transactions Reports (FCTRs) on a timely basis during the\nperiod under audit. The FCTR due dates are established by the Department of Health and\nHuman Services, and usually due 45 days after the end of the quarter. Our review disclosed that\n4 out of 11, or 36 percent, of the sample reports tested were submitted after the due dates.\nThe reporting controls and procedures utilized during the three-year audit period apparently did\nnot suitably emphasize the significance of timely and accurate cash management.\n\nThe effect of this condition is that Federal cash accountability controls are weakened when\nFCTRs are not submitted in a timely manner. To ensure funds are being spent for the grant\'s\npurpose and in accordance with grant conditions, a timely accounting is necessary. When\naccounting controls are weak, it becomes easier to circumvent established processes.\n\nIt should be noted that the current RISA Compliance Officer was hired in December 2002.\nReviews of more recent FCTR submissions show marked improvement in accuracy and\ntimeliness.\n\n\nRecommendation\n\nWe recommend that RISA continue the efforts that resulted in its recent improvement in\nsubmitting accurate and timely cash transactions reports. To ensure the improved process\ncontinues when future personnel changes occur, policies, procedures and monitoring regarding\nthe reporting of FCTRs should be formalized in writing.\n\x0cRISA \'s Response\n\nThe RISA disagrees with this finding but acknowledges that 4 of 11 FCTRs sampled were, in\nfact, not submitted on a timely basis.\n\nAuditor\'s Comment\n\nThe finding and recommendation remain unchanged.\n\nFindinn No. 2\n\nCondition\n\nThe RISA financial management system was not maintained in accordance with certain\nCorporation grant provisions. Specifically, PDAT grant and administrative grant transactional\ndetails are not segregated by program year.\n\nDuring the audit period, three PDAT grants were awarded. In RISA\'s accounting records,\nPDAT transactions were all recorded to one PDAT account. When funds were exhausted in one\ngrant, the accountant would bill the next PDAT grant for future expenses.\n\nProvision No. 5 of the Corporation\'s grant provisions, entitled "Financial Management\nProvisions," requires that "[flinancial management systems must be capable of distinguishing\nexpenditures attributable to this Grant from expenditures not attributable to this Grant. This\nsystem must be able to identify costs by year and by budget category and to differentiate between\ndirect and indirect costs or administrative costs." The RISA PDAT and administrative grants\nviolate this provision.\n\nThese conditions make it difficult to compare actual expenditures by programmatic year to\nbudget line items by programmatic year. It becomes potentially more difficult to monitor and\ncontrol costs if management is unaware of how actual expenditures compare with the annual\nbudget. It is also more difficult for management to determine if they are in compliance with\ngrant provisions. (See also Finding No. 3).\n\nThis finding is also considered to be an internal control weakness.\n\nRecommendation\n\nWe recommend that RISA establish a financial management system with policies, procedures\nand accounting practices that enable RISA to track and support the funded and expended\namounts by grant, program year, and budget line item.\n\nRISA \'s Response\n\nThe RISA disagrees with this finding.\n 28\n\x0cAuditor\'s Comment\n\nIn its response, RISA did not address the substance of the finding (i.e., that it charged costs\nassociated with the PDAT program to a single account and then assigned the costs to grants\nbased on the availability of funds). Since RISA has not presented evidence to refute the\nsubstance of the finding, this finding remains unchanged.\n\nFinding No. 3\n\nCondition\n\nNon-allocable costs were charged to the PDAT grant. The review of PDAT\'s other direct costs\nrevealed various questioned costs that were not allocable to PDAT grants, including some\npersonal items inadvertently charged to the RISA credit card and a book purchase for the Learn\n& Serve program.\n\nIn order for costs to be reimbursable under Corporation grants, the charges must be allowable,\nallocable and reasonable, and in accordance with grant terms, conditions and governing\nprovisions and regulations.\n\nIn addition, RISA\'s accounting system, as implemented, is not in accordance with Corporation\ngrant provisions. Costs were not segregated by PDAT grant in RISA accounting records. This is\nnot in accordance with Corporation Grant Provision No. 5, "Financial Management," which\nstates, "[flinancial management systems must be capable of distinguishing expenditures\nattributable to this Grant from expenditures not attributable to this Grant." (See also Finding 2).\n\nThe effect of this condition is that unallowable and non-allocable costs were charged to the\nPDAT grant.\n\nThis finding is also considered to be an internal control weakness.\n\nRecommendation\n\nWe recommend that RISA establish financial and accounting controls that would preclude\ncharging non-allocable costs to Corporation grants.\n\nRISA \'s Response\n\nThe RISA disagrees with the characterization of this finding as contributing to a collective\nmaterial noncompliance and internal control weakness, but does not dispute the facts at issue.\n\nAuditor\'s Comment\n\nSince RISA does not dispute the basic facts supporting the finding and recommendation, they\nremain unchanged.\n\x0cFinding No. 4\n\nCondition\n\nThe RISA timekeeping system is not maintained in accordance with OMB Circular A-122. It\nappears that at least some RISA time sheets are being prepared based on the budget rather than\non actual work experience. In addition, we found time sheets where the charges were not\nreflected in the accounting records. An employee charged the administrative grant on the time\nsheet, but a portion of the administrative charges were instead charged to the disability grant. It\nappears as if the accounting for time is being controlled by the budget rather than the actual time\nspent on each Corporation grant. The RISA management indicated they are evaluating the\npossibility of using time certifications if the Corporation will approve this method. Time\ncertifications are a substitute system whereby the certification shows the ratio of time spent on\neach grant over several months. Since RISA is registered as a nonprofit organization, we have\nevaluated the time sheet issue under the cost principles for nonprofits, OMB Circular A-122.\nThis Circular permits the use of a substitute system if approved, in writing, by the Corporation.\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment B, states in part:\n\n m. Support of salaries and wages.\n\n (1) Charges to awards for salaries and wages, whether treated as direct costs or indirect\n costs, will be based on documented payrolls approved by a responsible official(s) of the\n organization. The distribution of salaries and wages to awards must be supported by\n personnel activity reports, as prescribed in subparagraph (2), except when a substitute\n system has been approved in writing by the cognizant agency. (See subparagraph E.2\n of Attachment A.) (emphasis added)\n\n (2) Reports reflecting the distribution of activity of each employee must be maintained\n for all staff members (professionals and nonprofessionals) whose compensation is\n charged, in whole or in part, directly to awards. In addition, in order to support the\n allocation of indirect costs, such reports must also be maintained for other employees\n whose work involves two or more functions or activities if a distribution of their\n compensation between such functions or activities is needed in the determination of the\n organization\'s indirect cost rate(s) (e.g., an employee engaged part-time in indirect cost\n activities and part-time in a direct function). Reports maintained by non-profit\n organizations to satisfy these requirements must meet the following standards:\n\n (a) The reports must reflect an after-the-fact determination of the actual activity of\n each employee. Budget estimates (i.e., estimates determined before the services\n are performed) do not qualify as support for charges to awards. (emphasis added)\n\x0c (b) Each report must account for the total activity for which employees are compensated\n and which is required in fulfillment of their obligations to the organization.\n\n (c) The reports must be signed by the individual employee, or by a responsible\n supervisory official having first hand knowledge of the activities performed by the\n employee, that the distribution of activity represents a reasonable estimate of the actual\n work performed by the employee during the periods covered by the reports.\n\n (d) The reports must be prepared at least monthly and must coincide with one or more\n pay periods.\n\nThe effect of this condition is that recorded time charges may not reflect actual effort expended\nagainst final cost objectives (grants). Therefore, such charges may be inaccurate and appropriate\nfor reporting use in grant claims.\n\nRecommendation\n\nWe recommend that RISA revise, or otherwise supplement, its current timekeeping practices to\nprovide for an accurate recording of employees\' actual time spent on final cost objectives. The\nRISA should continue to evaluate the possibility of using time certifications, or a substitute\nmethod, if the Corporation will approve this method.\n\nRISA \'s Response\n\nThe RISA disagrees with the finding that its timekeeping system does not comply with OMB\nCircular A-122. The RISA maintains that its "employees record actual time worked for the time\nreporting period on their timesheets. On the timesheets, employees allocate time worked to cost\nobjectives based on time studies (periodic testing of actual work performed by employees) that\nare periodically reviewed and incorporated into budget projections." The RISA adds,\n"employees are aware of the allocation and the Executive Director reviews the time allocations\nin accordance with OMB Circular A-122, Attachment B, 5 7(m)(2)(a) (Support of Salaries &\nWages (c) states that time sheets must be signed by a responsible supervisory official having first\nhand knowledge of the activities performed by the employee, that the distribution of activity\nrepresents a reasonable estimate of the actual work performed by the employee during the\nperiods covered by the time sheet."\n\nAuditor\'s Comment\n\nThe RISA\'s response does not address the basic issue that charges on time sheets were different\nfrom the corresponding charges in its accounting records. We do not agree that RISA\'s\ntimekeeping system is in compliance with OMB Circular A-122. The use of time studies\n(periodic testing of actual work performed by employees) does not meet the requirement for an\n"after-the-fact determination of the actual activity of each employee." (OMB Circular A-122,\nAttachment B, 5 7(m)(2)(a)). Accordingly, the finding and recommendation remain unchanged.\n\x0cFinding No. 5\n\nCondition\n\nGrant-authorized living allowance payments to AmeriCorps members were exceeded by the\nfollowing subrecipients, in the amounts indicated:\n\n City Year, Inc. $ 412\n Public Education Funds 2,558\n International Gallery For Heritage & Culture 1,694\n\n Total\n\nAlthough the above subrecipients cited a number of reasons for overpayments, the most common\ncause cited was that the members continued on the payroll beyond the time when the living\nallowance ceiling had been met. While the subrecipient may feel responsible for compensating a\nmember if helshe remains on the payroll, the reimbursement of member living allowances on\nCorporation grants is limited to the ceiling amount of the living allowance as indicated in the\nmember contract and the grant budget.\n\nThis condition causes overcharges to the subrecipients\' grants in the amounts shown above.\n\nRecommendation\n\nWe recommend that RISA establish oversight policies and procedures to ensure that its\nsubrecipients comply with ceiling limitations for living allowances paid to AmeriCorps\nmembers.\n\nRISA \'s Response\n\nThe RISA disagrees with this finding. The RISA asserts that these costs are allowable because\n(1) the living allowances paid did not exceed the AmeriCorps limitation on living allowances, (2)\nmembers were still in service andlor had a longer length of service than their peers, (3) member\nservice occurred within the allowable 12-month window, (4) subgrantee living allowance\nbudgets were not exceeded, and (5) subrecipients appropriately met all other criteria including\nmatch requirements for living allowances.\n\nAuditor\'s Comment\n\nGrant provisions stipulate the maximum amount that may be paid for living allowances with\nFederal Funds. The RISA exceeded this stipulated amount If circumstances indicate that the\nmember(s) should be paid more than the stipulated amount in their contracts, the contracts\nshould be amended and the Corporation should be notified of the change in the living allowance\nlevels. The finding and recommendation remain unchanged.\n\x0cFinding No. 6\n\nCondition\nSome subrecipients incurred and claimed more than 20 percent of member service hours for\ntraining. AmeriCorps Provision (7)(e) states, "[n] o more than 20 percent of the aggregate of all\nmember service hours in a Program may be spent in education, training or other non-direct\nactivities."\nThis training ceiling limitation was exceeded in various program years by the following\nsubrecipients:\n City Year, Inc $ 28,072\n Public Education Funds $ 22,214\n Children\'s Crusade For Higher Education $ 5,883\n Total $ 56,169\n\nThe RISA and its subrecipients cited various mitigating reasons for exceeding the ceiling. The\nCorporation should consider these reasons in resolving the issue. However, from an audit\nstandpoint, the above subrecipients were in noncompliance with AmeriCorps Provision (7)(e).\nThis condition caused an overcharging of training costs to the three subrecipients\' grants totaling\n$56,169.\n\nRecommendation\n\nWe recommend that RISA establish oversight policies and procedures to ensure that its\nsubrecipients comply with ceiling limitations for training hours charged to grants.\n\nRISA \'s Response\n\nThe RISA acknowledges that some subrecipients exceeded the 20 percent limitation, but asserts\nthat the aggregate AmeriCorps program training hours, for all subrecipients, were within the\nlimit. The RISA does not believe that the audit\'s "restrictive interpretation" of the grant\nprovision should be enforced.\n\nAuditor\'s Comment\n\nWe interpret the AmeriCorps Provision to apply to each subrecipient. Accordingly, no single\nsubrecipient may claim more than 20 percent of member service hours for training. Furthermore,\nthe AmeriCorps Provisions stipulate that "[bly accepting funds under this Grant, the Grantee\nagrees to comply with the AmeriCorps Provisions and all applicable Federal statutes, regulations\nand guidelines," and "[tlhe grantee agrees to include in all subgrants the applicable terms and\nconditions contained in this award." Thus, the provision limiting training time applies to RISA\'s\nsubrecipients. The finding and recommendation remain unchanged.\n\x0cFinding No.7\n\nCondition\n\nThe International Gallery for Heritage & Culture (IGHC) is not in compliance with AmeriCorps\nprovisions regarding in-kind contribution financial records. The AmeriCorps Provision on\nfinancial management states:\n\n The Grantee must maintain adequate supporting documents for its expenditures\n (federal and non-federal) and in-kind contributions made under this Grant. Costs\n must be shown in books or records [e.g., a disbursement ledger or journal], and\n must be supported by a source document, such as a receipt, travel voucher,\n invoice, bill, in-kind voucher, or similar document.\n\nFor the program years included in this audit, the IGHC accountant calculated 1112\'~of the\nbudgeted in-kind match, plus other actual in-kind contributions, and inserted the resulting figure\nin funding requests and grant financial reports (FSRs and PERs). Recordkeeping, including\nrequests to contributors for documentation and organization of incoming documentation, was\nhaphazard at best. The IGHC\'s Director recognizes that this is an area that must be improved.\n\nAs a result of this procedure, we took an analytical approach to ensure the required match of 33\npercent was met for AmeriCorps budget categories B through F. The cash match, 15 percent, for\nmembers living allowance was verified using payroll records. Using cash match and the\navailable in-kind documentation, we were able to determine that the required match for\ncategories B through F was met.\n\nRecommendation\n\nWe recommend that RISA follow up to ensure that the IGHC accounting process is corrected.\nWe also suggest that RISA monitor this area in the future and consider furnishing additional\nguidance to its subrecipients.\n\nRISA \'s Response\n\nThe RISA has agreed to follow up to ensure that the situation at IGHC is corrected, will continue\nto monitor this area in its annual site visits, and will include additional coverage in its annual\nsubgrantee fiscal training sessions.\n\nAuditor\'s Comment\n\nWe consider this response to be adequate.\n\x0cFinding No. 8\n\nCondition\n\nDuring the periods under audit, the following subrecipients did not maintain, in some members\'\nfiles, certain required AmeriCorps member eligibility documentation (e.g., proof of citizenship,\nage, high school diploma or equivalency certificate, criminal record checks as required, and a\nsigned contract):\n\n City Year, Inc.\n\n Public Education Fund\n\n International Gallery For Heritage and Culture\n\nDespite RISA\'s review of member files and emphasis during subrecipient training, some RISA\nsubrecipients may not have fully understood the importance of maintaining complete member\nfiles. It should be noted that the current RISA Compliance Officer is actively reviewing these\ndocumentation requirements during site visits to subrecipients.\n\nThe ArneriCorps provision on member eligibility, recruitment, and selection, requires that the\ngrantee maintain verifiable records that document each member\'s eligibility to serve. These\nprogrammatic records must be maintained for three years from the submission date of the final\nFSR.\n\nWithout complete member files, RISA cannot verify that member eligibility requirements are\nbeing met. In order to ensure that grant funds are used for the purposes intended, it is important\nto make certain that only qualified members are allowed to serve.\n\nThe effect of this condition is that we questioned the living allowances and related benefits of\n$84,488 for those AmeriCorps members whose eligibility documentation was missing. We also\nquestioned corresponding education awards for those members in the amount of $32,580.\n\nRecommendation\n\nWe recommend that RISA continue to aggressively follow up on these member documentation\nrequirements and continue providing formal guidance on records management and retention to\nits subrecipients.\n\nRISA \'s Response\n\nThe RISA states that the audit confirmed its own findings and that it requires subgrantees to\neliminate ineligible costs from final claims at or prior to closeout, at which time final FSRs will\nbe corrected and refund checks issued to the Corporation with final closeout documents.\n\x0cAuditor\'s Comment\n\nWe consider this response to be adequate.\n\nFinding No. 9\n\nCondition\n\nTwo subrecipients exceeded the mandated ceiling of 5 percent on administrative costs chargeable\nto grants. AmeriCorps Provision (23)(b) states that administrative costs cannot exceed 5 percent\nof total Corporation funds actually expended under the award. The effect of this condition is that\nthe following subrecipients exceeded this ceiling in the amounts indicated:\n\n Public Education Funds $ 3,006\n International Gallery For Heritage and Culture $3,049\n Total $ 6.055\n\nThe Office of Inspector General Full Scope Audit Program states:\n\n If the limit is exceeded, include this as a compliance finding in the audit report.\n The cost is not necessarily questioned because: a) some costs may be allowed\n during audit resolution, and b) the administrative cost limit must be calculated at\n the grant level (not by each subrecipient).\n\nAccordingly, we did not question these costs but instead are treating this finding as a\nnoncompliance issue.\n\nThe RISA indicated that there may be mitigating circumstances that caused these imbalances.\nHowever, our audit position reflects the provision requirements as stated.\n\nRecommendation\n\nWe recommend that RISA include administrative cost limits as an area of emphasis during its\nmonitoring visits of subrecipients.\n\nRISA \'s Response\n\nThe RISA presents two positions on this issue. First, it observes that the Corporation waived this\nrequirement during the program year 2002-2003 because of the freeze on AmeriColps\nenrollment. Second, it notes that, at the grant level, administrative costs were below the five\npercent ceiling.\n\x0cAuditor\'s Comment\n\nWe consider this response to be adequate.\n\nFinding No. 10\n\nCondition\n\nThere were a variety of miscellaneous noncompliance documentation issues related to our review\nof member files at the subrecipients audited. The issues covered subject areas such as content of\nmember contracts, supervision, member evaluations (mid-term and end-of-term), code of\nconduct, and timeliness of submissions of required forms (enrollment and exit). The results were\nsporadic by subrecipient in terms of documentation shortfalls. The subrecipient documentation\nissues are in addition to the noncompliance issues discussed previously regarding member\neligibility.\n\nWe provided each subrecipient with the summary schedules of our compliance results during the\nexit briefings at each location. The RISA representatives were also provided with copies of these\nschedules, or were otherwise advised of our conclusions.\n\nRecommendation\n\nWe recommend that RISA utilize these compliance results schedules for follow-up reviews\nduring its future monitoring visits of these subrecipients.\n\nRISA \'s Response\n\nThe RISA asserts that all subgrantees have systems in place that are fully consistent with all\nFederal and State grant provisions. The RISA argues that the fact that some required documents\nwere missing from the files of several members does not mean that these systems are inadequate.\n\nAuditor\'s Comment\n\nThe documentation identified by this audit refute RISA\'s assertion that these systems are\nadequate. The finding and recommendation remain unchanged.\n\nFinding No. 1 1\n\nCondition\n\nDuring our review of AmeriCorps member files, we noted that several individuals were pursuing\nGED accreditation or other courses, and that this training time was included in the service hours\nreported by the members. Based on ArneriCorps Provisions (7)(c) and (7)(h), training offered to\nmembers should relate directly to the program\'s objectives in the community, not to the\n\x0cmember\'s personal training needs or desires. Provision (7)(h) mandates a support system for\nmembers to obtain a GED or higher education including counseling members on GED courses or\nthe college application process, but it bars the use of service time to be used for such training.\nWe have not quantified this condition as questioned costs since some of the living allowances of\nindividuals involved have already been questioned for other eligibility reasons. However, based\non discussions with the OIG, we have been advised to report this practice as a noncompliance\nissue.\n\nThe RISA does not agree that GED training should be disallowed. In fact, RISA encourages\nsubrecipients to use AmeriCorps training for GED purposes. The RISA officials also stated that\nsome members have children at home, and after serving their ArneriCorps commitment, may not\nhave the time to pursue a GED. The RISA management believes that the allowability of college\ncourse time depends on its relationship with AmeriCorps service objectives.\n\nRecommendation\n\nWe recommend that RISA limit the reportable member training time to service directly\nassociated with the grant program. The RISA should exclude GED training or other outside\ncourses from the reportable service hours of members. We also recommend that the Corporation\nprovide some clarifying guidance to its grantees on this issue.\n\nRISA \'s Response\n\nThe RISA disagrees with this finding asserting that AmeriCorps Provision 7(b) mandates a\nsupport system for members to obtain a GED Certificate or higher education, including\ncounseling members on GED courses. However, the RISA notes that the AmeriCorps Provisions\n"bar the use of service time to be used for such training."\n\nAuditor\'s Comment\n\nThe RISA has not addressed the issue of individuals pursuing GED accreditation or other\ncourses, while including such time as service hours. Further, we are not persuaded that "a\nsupport system for members to obtain a GED" or "counseling members on GED courses"\nconstitutes authorization for members to use service hours to pursue GED accreditation or other\ncourses. Accordingly, the finding and recommendation remain unchanged.\n\n\nInternal Controls Over Financial Reporting\n\nIn planning and performing our audit of awards costs as presented in Exhibits A through D for\nthe period July 1, 2000, to December 3 1, 2003, we considered RISA\'s internal controls in order\nto determine our auditing procedures for the purpose of expressing our opinion on the financial\nschedules and not to provide assurance on the internal controls over financial reporting.\n\x0cThe RISA management is responsible for establishing and maintaining internal controls. In\nfulfilling this responsibility, estimates and judgments by management are required to assess the\nexpected benefits and related costs on internal control policies and procedures. The objective of\ninternal controls is to provide management with reasonable, but not absolute, assurance that\nassets are safeguarded against loss from unauthorized use or disposition. Internal controls also\nhelp ensure transactions are executed in accordance with management\'s authorization and\nrecorded properly to permit the preparation of the financial schedules in accordance with\ngenerally accepted accounting principles of the United States of America. Because of inherent\nlimitations in any internal controls, errors or irregularities may nevertheless occur and not be\ndetected. Also, projection of any evaluation of the internal controls to future periods is subject to\nthe risk that procedures may become inadequate because of changes in conditions or that the\neffectiveness of the design and operation of policies and procedures may deteriorate.\n\nOur consideration of internal controls would not necessarily disclose all matters of internal\ncontrol over financial reporting that might be reportable conditions. Under standards established\nby the American Institute of Certified Public Accountants, reportable conditions involve matters\ncoming to our attention relating to significant deficiencies in the design or operation of the\ninternal controls, that, in our judgment, could adversely affect the entity\'s ability to record,\npossess, summarize and report financial data consistent with the assertions of management in the\nfinancial schedules. Material weaknesses are reportable conditions in which the design or\noperation of one or more of the internal control components does not reduce to a relatively low\nlevel the risk that errors or irregularities in amounts, which would be material in relation to the\nfinancial schedules being audited, may occur and not be detected within a timely period by\nemployees in the normal course of performing their assigned functions.\n\nInternal Control Findings\n\nWe noted the following matter that we consider to be material weaknesses:\n\nFinding No. 12\n\nCondition\n\nThe RISA financial management system does not have an adequate disasterhackup plan. The\n"One-Write" checkinglrecord-keeping system utilized by RISA maintains, in one binder,\ntransactional entries for all disbursements, for all years, and for all grants. The sheets and entries\nare manually posted by month, and retained in the same binder. The outside CPA who provides\nthe monthly write-ups for the financial reports has summary records for the general ledger, but it\ndoes not appear that copies of the supporting documentation exist. There is no other backup or\ndisaster plan or process.\n\nIn the event of a catastrophe, RISA\'s transaction documentation would be lost permanently. We\nbelieve this constitutes an internal control deficiency.\n\x0cRecommendation\n\nWe recommend that RISA establish plans, policies and procedures for backup and recovery of\naccounting records in the event of a natural catastrophe (fire, flood, loss, etc.). We also\nrecommend that RISA explore the feasibility (e.g., perform a costbenefit analysis) of upgrading\nits current manual system to an automated process.\n\nRISA \'s Response\n\nThe RISA disagrees with this finding, asserting that while it does not have a formal written\ndisaster plan, it has made backup provisions in the event of a disaster and has an adequate\nprotocol in place. The RISA stated that it will formalize its current practices in writing and\nprovide documentation of its established procedures.\n\nAuditor\'s Comment\n\nW e consider this response to be adequate.\n\n\nFinding Nos. 1 through 7, and No. 9, as set forth in the compliance section of the report, are also\nconsidered findings on internal control.\n\n\n\n\nLeonard G. Birnbaum and Company, ~ L \\P\nAlexandria, Virginia\nJune 30,2004\n\x0c Follow-up On Pre-Audit Survey Findings\n OIG Audit Report No. 00-27, Pre-Award Survey Report of the\n Rhode Island Service Alliance\n\nThe Pre-Audit Survey was performed by Urbach Kahn & Werlin, PC. The Pre-Audit Survey\nReport was issued to Corporation management on June 23, 2000. Since considerable time has\nelapsed since the issuance of the report, there have been various changes and actions taken by\nRISA to address the conditions and findings cited.\n\nA summary of the current status of the Pre-Audit Survey findings is as follows:\n FINDINGS &\n CATEGORY RECOMMENDATIONS STATUS / DISPOSITION\nADMINISTRATION OF The pre-audit survey found no evidence to One error was found on an FSR in 1998\n GRANT FUNDS document review of subgrantee FSRs and (transposition) and corrected in the next\n matching recalculations prior to 1999. The FSR. This error is considered\n pre-auds survey recommended that RISA immaterial. The RISA has developed\n implement new procedures to review and implemented the use of a checklist.\n subgrantees\' FSRs, recalculate matching This procedure is now considered\n requirements, and document results of such effective.\n reviews.\n\n The pre-audit survey found that cash basis This finding apparently was not\n reporting for Learn & Serve subgrantees discussed at the exit conference. The\n does not appear to conform to ~ b r ~ o r a t i o n RISA disagrees with the conclusion.\n requirements. We evaluated Learn & Serve reporting\n during the full-scope audit and now find\n general compliance with Corporation\n requirements.\n\n\nThis report is intended for the information and use of the Office of Inspector General, as well as\nthe management of the Corporation, RISA and its subrecipients, and the U.S. Congress.\nHowever, this report is a matter of public record and its distribution is not limited.\n\x0c Appendix A\n\n\nResponse of the Rhode Island Service Alliance\n\x0c September 9,2004\n RtlODF ISLAND 5TRVICF A11 IANCF\n Carol Bates\n Acting Assistant Inspector General for Audit\n Corporation for National and Community Service\n Office of Inspector General\n 120 1 New York Avenue, NW\n Suite 830\n Washington, DC 20525\n\n Dear Ms. Bates:\n\n Attached please find the Rhode Island Service Alliance\'s (RISA) response to OIG Audit\n Report Number 04-22 dated July 22, 2004. Subgrantees\' comments are included in\n Attachments 1-4.\n\n As you know, RISA and its subgrantees have worked cooperatively with the CNCS IG\n auditors over the course of the ten months of audit fieldwork and have continually\n demonstrated responsiveness to requests for information and feedback since audit\n inception.\n\n Similarly, we are prepared to work cooperatively with the CNCS Audit Resolution\n Specialist over the corning months to resolve any disagreements we have with the audit\n findings, to provide additional documentation for consideration, and to implement\n corrective action as appropriate. In fact, we are already aware of additional\n documentation available from two of our subgrantees (The Education Partnership and the\n International Gallery for Heritage & Culture) that should reduce questioned costs related\n to member compliance issues by 50% ($42,141 - before considering related education\n awards).\n\n As explained in our audit response, we respectfully and strongly disagree with the audit\n findings and recommendations. At present, the report lacks objectivity. Government\n auditing standards require that the entire audit report be balanced in content, that it should\n not be misleading and that it should place the audit results in perspective. We do not\n believe the audit report is balanced in content, in certain sections the audit report is\n misleading, and audit findings are not placed in appropriate context. Additionally, the\n audit report does not recognize any positive aspects of the programs under audit, of\n which there are many; recognizing such positive aspects was directly applicable to audit\n objectives. We also do not believe that our feedback to date has been fully considered by\n the auditors.\n\n In summary:\n\n 1. The auditors consider that the late filing of 4 of 11 Federal Cash Transactions\n Reports contributes to a collectively material noncompliance and internal control\n finding. The auditors disregard extenuating circumstances related to t&e late\n\n\n TRANSFORMING\nP 0 BOX 72822 PROVIDENCE, R H O D E I S L A N D 02907 T 401 331 2298 F 401 331 2273 WWW RISERVlCEALLIANCE.ORG INNOVATIVE SERVICE\n IDEAS I N T O A C T I O N\n\x0c filing of 3 of the 4 reports (technical glitches in the on-line reporting system),\n RISA\'s historical track record for timely reporting, and our overall internal\n controls over cash management. All of this information should be taken into\n consideration.\n\n2. The auditors assert that RISA\'s Financial Management System was not\n maintained in accordance with grant provisions and this contributes to a\n collectively material noncompliance and internal control finding. The auditors\n ignore the fact that (a) our current system and memorandum records allow us to\n segregate transactions by time period, (b) RISA conducts a detailed review of\n transactions before filing Financial Status Reports to ensure expenditures are\n charged to the correct grant, (c) our existing system is entirely appropriate for the\n size and scope of our organization, and (d) our current system is in complete\n compliance with grant provisions and fully supported by favorable A- 133 audit\n opinions, favorable Pre-Audit Surveys and Standards Visits, and a total lack of\n material noncompliance findings and questioned costs attributable to the use of\n this system during the audit.\n\n3. The auditors assert that non-allocable costs were charged to the PDAT grant and\n that this contributes to a collectively material noncompliance finding and a\n collectively material internal control weakness. The auditor disregards the fact\n that this finding is immaterial representing less than .2% ($715/$3 15,000) of\n claimed PDAT costs and that the immaterial misposting error has since been\n corrected.\n\n3. The auditors assert the RISA timekeeping system is not maintained in accordance\n with OMB Circular A- 122 and that this contributes to a material noncompliance\n and internal control weakness. We disagree with the audit assertion: our current\n system is adequate, accurate, and results in a "reasonable distribution of the actual\n work performed" in accordance with OMB Circular A-122 m (Support of Salaries\n & Wages [c]). Not insignificantly, favorable A-133 audits, standards visits and\n Pre-Audit Surveys also support our system.\n\n Please note that in order to be responsive to OIG audit recommendations, we have\n (a) proposed supplementing our procedures with a Level of Effort Certification\n for all employees, and (b) requested formal CNCS approval for this practice in an\n email dated August 5,2004. We expect to receive formal CNCS approval during\n the audit resolution process.\n\n5. The audit report asserts that some subrecipients were paid living allowances in\n excess of authorized amounts and that this contributes to a "collectively material\n noncompliance" and "internal control weakness." We disagree with the auditors\'\n interpretation that grant-authorized living allowances were exceeded and that this\n contributes to a collectively material noncompliance and internal control\n weakness.\n\n\n\n TRANSFORMING\n INNOVATIVE SERVICE\n IDEAS I N T O ACTION\n\x0c The auditors disregard the fact that the questioned amount is immaterial\n (representing .07% of total AmeriCorps Funds claimed--$4,664/$6,449,155) and\n also allowable as (a) the stipends paid did not exceed the AmeriCorps cap or\n limitation on stipends, (b) members were still in service and/or had a longer\n length of service than their peers, (c) member service occurred within the\n allowable 12-month window, (d) sub-grantee stipend budgets were not exceeded,\n and (e) the subrecipients appropriately met all other criteria, including match\n requirements for stipends.\n\n6. The audit report notes that some subgrantees incurred and claimed more than 20\n percent of member service hours for training but does not consider mitigating\n circumstances for the excess hours. The auditors assert that this finding\n contributes to a material noncompliance and internal control weakness; we\n disagree with this assessment.\n\n While we acknowledge that some subrecipients exceeded the 20% ceiling limit\n for training individually, in aggregate, AmeriCorps Program training hours were\n within the ceiling limit with 19.77% of training to total service hours (1668 13.66\n 1843941.80) for the period under review. On balance, we believe our programs are\n doing their best to prepare members for service and to recruit a diverse corps\n without adversely impacting quality service delivery or compromising service\n hours. In practice, the training hour limit is difficult if not impossible for\n programs or RISA to monitor in a meaningful way; please see our audit response\n for a detailed explanation. We will also forward our comments to CNCS for\n consideration in the rulemaking process.\n\n7. The audit report asserts that one subrecipient is not in compliance with\n AmeriCorps provisions regarding in-kind contribution financial records and this\n contributes to a collectively material noncompliance and internal control\n weakness.\n\n While this one sub-recipient made technical errors in reporting match in its\n official books and records, it did not result in a "collectively material\n noncompliance and internal control weakness." In this case, the sub-grantee\n provided source documentation to the auditors confirming that the match on the\n grant was actually met. While we think the sub-grantee should take corrective\n action, this does not constitute a "collectively material weakness," since there is\n no resulting cost questioned and compensating controls are clearly in place. The\n auditors disregard this information.\n\n8. Missing documentation for certain aspects of member eligibility (Citizenship and\n Education) should not result in a finding of a "collectively material"\n noncompliance. While it is true that some sub-grantees did not maintain adequate\n documentation for member eligibility in a small number of memberfiles, the\n report overstates the issue by classifying this as contributing to a material\n noncompliance.\n\n\n TRANSFORMING\n INNOVATIVE SERVICE\n IDEAS I N T O A C T I O N\n\x0c Furthermore, all costs questioned relating to citizenship eligibility (the majority of\n questioned costs) were already evidenced in our site visit reports and continue to\n be actively monitored and pursued; the audit only confirmed our own findings.\n The Service Alliance did not fail to act: the audit occurred while the monitoring\n process was still in progress and on track to successful completion. As planned,\n eligibility issues remaining at the time of closeout will be backed out of the sub-\n grantees\' final claims, corrected on the final FSRs, and refund checks will be\n issued to CNCS with final closeout documents.\n\n9. The report asserts that two subrecipients exceeded the mandated AmeriCorps\n provisional ceiling of 5 percent on administrative costs chargeable to grants\n resulting in a "collectively material noncompliance" and internal control\n weakness.\n\n Not only is the amount described immaterial (representing .09% of total\n AmeriCorps Funds claimed--$6,055/$6,449,155), half of the amount cited as a\n noncompliance was in fact authorized and in accordance with CNCS guidelines.\n The remaining amount in question was the result of a bookkeeping error in a\n subrecipient\'s accounting system. This error, which would have been detected\n following routine review of the program\'s final drawdown request, has since been\n corrected. The auditors disregard the above facts.\n\n10. We disagree with the opinion that the finding "some AmeriCorps member files\n were missing required documentation" can be interpreted as contributing to a\n "collectively material noncompliance." The report does not provide appropriate\n perspective on the significance of the reported finding. Government Auditing\n Standards (8.41) specify that "Giving report users an adequate and correct\n understanding means providing perspective on the extent and significance of\n reported findings, such as the frequency of occurrence relative to the number of\n cases or transactions tested.. ." Such information is clearly missing from the audit\n report. All subgrantees funded by the Service Alliance have systems in place that\n are fully consistent with all federal and state grant provisions. During on-site\n visits conducted by the Service Alliance staff, we monitor subgrantees\' use of the\n established systems by reviewing member files individually and assessing the\n overall condition of subgrantees\' files.\n\n Combined, the 4 AmeriCorps subgrantees audited maintained more than 40,000\n pages of documentation for the period under review. The fact that some required\n documents were missing from the files of several members does not mean that the\n systems that our subrecipients have in place are not adequate or contribute to a\n collectively material weakness. Moreover, the fact that most member files had all\n required documentation suggests not only that existing systems are adequate, but\n also that the Service Alliance is successful in ensuring that these systems are used\n consistently.\n\n\n\n\n TRANSFORMING\n INNOVATIVE SERVICE\n IDEAS INTO ACTION\n\x0c1 1. During the review of AmeriCorps member files, the auditors noted that several\n individuals were pursuing GED accreditation and that this training time was\n included in the service hours reported by members. The auditor believes GED\n training should be disallowed as it is somehow prohibited by grant provisions and\n only personally beneficial to the member. The auditors assert that this finding\n contributes to a collectively material noncompliance.\n\n We strongly disagree with the audit finding and continue to find the language\n used to describe the finding confusing and misleading. The auditor inaccurately\n implies that member service time was used for GED training when in fact\n member training time was appropriately used for GED training. The audit\n misstates and misinterprets the cited grant provisions to argue for disallowance of\n GED training time as they consider it unrelated to program objectives and believe\n GED training is provided only to meet a member\'s personal training needs and\n desires.\n\n The grant provisions cited by the auditor (and provided in full text in our\n response) do not support the audit conclusions. The provisions do not state that\n training should only benefit the program and not benefit the member. The\n provision does not bar the use of GED time as training time. This longstanding\n practice in Rhode Island has been fully and traditionally authorized by CNCS and\n not barred by AmeriCorps grant provisions as asserted in the audit.\n\n A member\'s pursuit of a GED absolutely relates directly to the program\'s\n objectives in the community. National and Community Service funding in the\n state of Rhode Island is exclusively earmarked for education-related programs.\n Members largely work with children in school and in after-school settings\n implementing tutoring, literacy, stay-in-school, homework clubs, and other\n similar programs. It is absurd to imply that this training is simply to meet a\n member\'s personal training needs and desires. Programs train members so they\n will be prepared to deliver impactful services to the community and also be\n prepared for success in their own lives. The training questioned by the auditors is\n dictated by AmeriCorps requirements and program, partner agency, and service\n recipient needs. Therefore, the GED training is entirely appropriate, and in no\n way contributes to a collectively material noncompliance.\n\n12. The audit report is inaccurate in its assertion that "RISA\'s Financial Management\n System does not have an adequate disasterlback-up plan" and that this finding\n results in an internal control weakness.\n\n Although RISA does not have a formal written disaster plan, we have made\n provisions for an accounting disaster and have an adequate protocol in place.\n Therefore, our current practice does not contribute to a collectively material\n noncompliance. Copies of the cash disbursement journal, cash receipts journals,\n general journal and ledger are kept off premises in our CPA\'s office. The bank\n stores copies of our checks. Finally, a computer back up disc is burned bi-weekly\n\n\n TRANSFORMING\n I N N O V A T I V E SERVICE\n IDEAS I N T O A C T I O N\n\x0c and kept in a fireproof safe off-site. We will commit our current practice to\n writing to provide documentation of our established procedures.\n\n\nWe look forward to receiving a copy of the final audit report that will incorporate our\nresponses and provide meaningful feedback regarding the auditors\' consideration of our\nresponse.\n\nRespectfully,\n\n\nyum,\\-<&.%.&I.&=I\nLeo A. Beliveau 111\n -\n\nChair\nRhode Island Service Alliance\n\n\n\n\n TRANSFORMING\n INNOVATIVE SERVICE\n IDEAS I N T O ACTION\n\x0c Rhode Island Service Alliance\n and Subgrantee Responses to the\n\n CNCS Office of Inspector General\'s (OIG)\n Draft Report of Audit Findings for\n The Rhode Island Service Alliance\n\n OIG Audit Report Number 04-22, dated July 22,2004\n\nIntroduction\nThe following comments were prepared in response to the CNCS Office of\nInspector General\'s draft report of audit findings for the Rhode Island\nService Alliance (OIG Report Number 04-22), dated July 22,2004.\n\nIt is important to note that the Rhode Island Service Alliance (RISA) was not\ninformed about the characterization of audit findings, i.e. the audit opinion,\nuntil the July 14,2004 exit briefing. During the exit briefing we were\ninformed of 13 material audit findings related to instances of noncompliance\nand internal control weaknesses. During the ten-month audit process, we\nwere never informed of the audit opinion and not given appropriate time to\nrespond to this characterization of audit findings (we were given 2-3 days to\nrespond to the material findings of noncompliance and internal control\nweaknesses).\n\nAdditionally, during the exit briefing, we were informed by the partner-in-\ncharge of the audit that there would be no "substantive" changes to the\n"preliminary" draft audit report and no "issue" changes would be considered\n-just changes to "form." He suggested that since we had been so\ncooperative during the audit process, there was little we could add at this\npoint to what the auditors already know.\n\nIn response to the surprising audit opinion findings contained in the\n"preliminary" draft report provided to us during the July 14,2004 audit exit\nbriefing, and the statements made by the partner regarding the "preliminary"\ndraft audit report, we contacted the Inspector General\'s office, providing\n\x0cthem both verbal and written comments citing our objections to the audit\nfindings and to the final stages of the process.\n\nWe provided timely verbal and written responses to the Inspector General on\nJuly 15 and 16,2004. Our written response included 8 pages of comments\nciting objections to the audit findings, including factual errors, as well as a\ncover letter that outlined our concerns regarding this process. It is important\nto note that the process surrounding the issuance of the draft audit report was\nnot representative of the cooperation and communication extended by RISA\nand the auditors during the 10 months of audit fieldwork. While we do not\nknow the exact cause of the breakdown in communication, we suspect it\nrelates to time pressure to issue the audit report.\n\nThe majority of our comments cited below were provided to the Office of\nInspector General for consideration in informing the final draft of the audit\nreport. We believe that our feedback was not fully considered before\nissuance of the Final Draft audit report on July 22,2004. The report was\nissued 4 business days after our written response date. We were informed at\nthe exit briefing that it takes 1 week for internal routing of the audit report\nbefore we would receive the final draft. Given the situation, the course of\nthe 10-month audit, and the serious nature of our objections, we were\nsurprised at speed in which the "preliminary" report was finalized and issued\nand to what little consideration was given to our audit response.\n\nAs a result of these conditions, we are forced to address issues in our\nresponse to the draft audit report that should have been raised and resolved\nlong before the IG\'s audit fieldwork concluded. This draft audit report\nartificially gives weight to "audit findings" which are indeed not "audit\nfindings" at all. As it is currently presented, we strongly believe that the\naudit report is not objective. As supported by our responses to audit findings\nand comments on the audit report presentation, the report is clearly not\nbalanced in content, in certain sections the audit report is misleading, and\naudit findings are not placed in appropriate context. Additionally, the audit\nreport does not recognize any positive aspects of the programs under audit,\nof which there are many; recognizing such positive aspects was directly\napplicable to audit objectives. Also, since our feedback has not been fully\nconsidered in this expedited process, we have no confidence that it will be\nconsidered at all. In any case, our responses are, once again, included\nbelow.\n\x0cOverview\nThe draft audit report lists 11 compliance findings that "are collectively\nconsidered to be material weaknesses" and of which "findings No. 1 through\n7 and finding 9" are also considered findings on internal control. The draft\naudit report lists a 12" finding which is considered a finding on internal\ncontrol.\n\nIn response to our request to the IG for clarification of the draft audit\nopinion findings, we were notified by the IG\'s Office that the auditors will\nrevise the draft audit report to reflect that (1) these noncompliance findings\nare collectively considered a material noncompliance finding and (2) audit\nfindings regarding internal control weaknesses are collectively considered g\nmaterial internal control weakness.\n\nThe report identifies questioned costs related to RISA subrecipients\nincluding City Year Rhode Island (Schedule A-1), The Rhode Island\nChildren\'s Crusade for Higher Education (Schedule A-2), the Parents\nMaking a Difference Program (Schedule A-3) and The International Gallery\nfor Heritage and Culture (Schedule A-4). Subrecipients\' comments are\nattached to this report as Attachments A-1 to A-4 respectively.\n\nThe following responses, prepared by RISA, specifically speak to the\n"collectively material" compliance and internal control findings listed in the\nreport, the questioned costs attributable to subgrantees, and include other\ncomments on audit report presentation.\n\n\nRISA Response to Finding 1\nWe disagree with compliance finding No. 1. "Late" submission of our\nFederal Cash Transaction Report (FCTR) should not be interpreted as a\n"collectively material noncompliance" and internal control weakness; this\nfinding is inaccurate. We also disagree with the audit report assertion that\nRISA\'s reporting controls and procedures "did not suitably emphasize the\nsignificance of timely and accurate cash management."\n\nOur procedures suitably emphasize the significance of timely and accurate\ncash management (please be aware that these procedures and internal\ncontrols are not limited to timely and accurate FCTR filing alone). In terms\nof FCTR filing, our accountant prepares the Quarterly Federal Cash\nTransaction Report and provides it to our Executive Director or Compliance\n\x0cOfficer for review and approval well before the established deadline. If any\ndiscrepancies are noted, they are reviewed and reconciled with the\naccountant and the FCTR is revised as needed before final submission by the\ndue date. Illf a problem exists with the online Payment Management System\n(PMS), we contact the responsible official at PMS and work with them to\ncorrect any inaccuracies as needed so we can file appropriately. During the\nperiod under audit the FCTRs were either manually or electronically\nsubmitted to PMS by RISA\'s Executive Director or electronically submitted\nby RIOSA\'s Compliance Officer. The position descriptions and reporting\nresponsibility levels of the Executive Director and Compliance Officer, as\nwell as our practices, emphasize the importance of meeting federal reporting\nrequirements.\n\nDuring the period under review the FCTR changed from a manual to an\nelectronic reporting system. We experienced many technical problems\nwhile trying to file reports from a Mac platform - for example, the report\nforms could not be downloaded, reports were not posted on-line until or\nimmediately before the deadline, and beginning balances were simply\nincorrect. One FCTR during this period inaccurately indicated that we had a\nbeginning cash balance of 11 million dollars. We were unable to change this\namount, however, and could not correctly report online until the error was\ncorrected by our contact at the Payment Management System (PMS). Also,\nin some cases the electronic Federal Cash Report was not available to us\nbecause it was not corrected and released to us online in time to file before\nthe deadline. These problems, of course, impacted the filing of more than\none FCTR. Per our procedures, we were in close contact with our PMS\nrepresentative during this time period to rectify the situation. Our grant\nofficer was continually kept informed of these impediments to timely filing\nand in fact was the one to advise us when the system finally allowed us to\nfile our reports accurately via the electronic method.\nIt should be noted that the purpose of the Federal Cash Transaction Report\nand its supporting regulations is to ensure the appropriate management of\nFederal dollars by Grantees. Our practices of timely and accurate preparation\n and filing of FCTRs and our review and reconciliation procedures allowed\n us to detect errors in the federal cash system itself. The fact that we were\n able to recognize and rectify these problems working with our PMS\nRepresentative and our CNCS Grants Officer testifies to our vigilance in\nfederal cash reporting.\n\x0cWhile 4 of our 11 reports were not submitted "on a timely basis" during the\nperiod under review, 7 reports were filed, on average, 14 days early.\nAdditionally three of the 4 late reports that were filed were due to technical\nglitches in on-line reporting. In all cases our hard copy reports were\ncompleted by the deadline.\n\nThe audit finding disregards the extenuating circumstances that resulted in\nthe "late" filing of electronic reports and the Service Alliance\'s historical\ntrack record and practice for filing the reports both accurately and on time.\n\n\nRISA Response to Finding 2\nWe disagree with compliance finding No. 2 that asserts "RISA\'s financial\nmanagement system has not been maintained in accordance with\nCorporation grant provisions" and the interpretation that this is a\n"collectively material noncompliance" and internal control weakness.\n\nWhile we recognize that our financial management system is not the most\nflexible or modem (we are investigating transitioning to a computerized\nsystem as budget and resources allow), it is certainly adequate and in\ncomplete compliance with grant provisions. Not insignificantly, it is also\nsupported by favorable A- 133 audit opinions, favorable Pre-Audit Surveys\nand Standards Visits, and a total lack of material noncompliance findings\nand questioned costs attributable to the use of this system during the audit.\n\nUse of our existing systems allows us to properly identify expenditures\n"attributable to this grant" from an expenditure "not attributable to this\ngrant" and to "identify cost by year and by budget category" as specified in\nthe Corporation\'s Financial Management grant provisions.\n\nOur manual one-write system, computerized General Ledger, monthly\nfinancial statements, chart of accounts, and memorandum records (discussed\nbelow) allow us to properly segregate AmeriCorps, Learn & Serve, Federal\nAdministrative, State Administrative, PDAT and Disability expenditures by\ngrant, by type of expense, and by time period of expenditure.\n\nWhile a separate account is not established for each grant year in the\naccounting system, transaction dates are assigned to all accounting entries so\nthat expenses can be identified to the proper accounting period. For\nexample, we produce monthly financial statements without assigning a\n\x0cspecific account number to each month of the year. Additionally, we\nmaintain sufficient memorandum records that permit for a proper\nsegregation of costs and also allow for a precise and accurate reporting of\nexpenditures on our Financial Status Reports.\n\nIt is important to note that our administrative funds are awarded on a\ncalendar year basis and do not frequently overlap. We review our cash\ndisbursementsjournal and payroll expenses to assure that appropriate\nexpenses have been charged to the appropriate time period before filing\nFSRs. Since we are a relatively small Commission with 5 employees (only 2\nfull-time) our volume of transactions is small and these types of\nexpenditures can be readily identified in review of the accounting records.\nOn average, we have 8 or fewer active grant accounts in a 12-month period.\nOur internal funds make up 10% or less of our revenue and represent half of\nour 8 accounts.\n\nIn terms of our AmeriCorps and Learn & Serve funds, which are largely\npass-through, we maintain Excel spreadsheets (memorandum records) that\nrecord payments made to subgrantees by year, thereby providing an ongoing\ncomparison of budget to actual expenditures (Federal and Match) and\nresulting available balances for each active program year.\n\nWhile we recognize that this system of reporting would not be practicable\nfor a very large organization (which we are not), our current system is cost\neffective, manageable, and in complete compliance with Corporation Grant\nProvisions.\n\n\nRISA Response to Finding No. 3\nWe do not agree that non-allocable costs of $741 charged to PDAT should\nresult in a finding of collectively material noncompliance and internal\ncontrol weakness. The finding is immaterial representing less than 2%\n($7 l5/$3 15,000) of claimed PDAT costs. The majority (84%) of the non-\nallocable costs charged to PDAT ($621) represent books that were\npurchased for the Learn & Serve Program and are an allowable expenditure.\nThe Executive Director indicated on the invoice that the expense should be\ncharged to Learn & Serve but they were inadvertently charged to the PDAT\naccount. Since PDAT funds are traditionally used for training, book charges\nwould normally be charged to PDAT. Additionally, because the books were\nused for training and program development for National Service Program\n\x0cDirectors, they are an allowable and allocable charge to the PDAT grant.\nThe above factors contributed to the misposting error.\n\nThe balance of the "non-allocable" costs relate to $69.00 for personal\ncharges that were incorrectly posted to PDAT (and properly refunded to\nRISA) and a $5 1.OO refund that was posted to the wrong account in error.\n\nPlease note that we have since corrected these rnispostings in our accounting\nsystem.\n\nThe immaterial mispostings to PDAT described in the audit finding were\ndue to human error, which invariably occurs. This is an unfortunate but\nsometimes unavoidable situation. The audit report overstates the importance\nof this immaterial finding. RISA\'s policies, procedures and practices are\nadequate to ensure that charges to grants are allowable, allocable and\nreasonable and in accordance with grant terms, conditions and governing\nprovisions and regulations. This is supported by favorable A- 133 audit\nopinions, favorable Pre-Audit Surveys and Standards Visits, and a total lack\nof material noncompliance findings and questioned costs attributable to the\nuse of this system during the audit. (See also our response to Finding 2\nabove).\n\n\nRISA Response to Finding No 4\nWe disagree with the audit assertion that our timekeeping system is not in\naccordance with OMB Circular A-122 and that this contributes to a material\nnoncompliance and internal control weakness. Our current approach\n(described below) is adequate, accurate and results in a "reasonable\ndistribution of the actual work performed" in accordance with OMB Circular\nA-122 m (Support of Salaries & Wages [c]). Not insignificantly, favorable\nA-133 audits, standards visits and Pre-Audit Surveys also support our\nsystem.\n\nHowever, in order to be responsive to OIG audit recommendations, we have\n(1) proposed supplementing our procedures with a Level of Effort\nCertification for all employees, and (2) requested formal CNCS approval for\nthis practice in an email dated August 5,2004. We expect to receive formal\nCNCS approval during the audit resolution process.\n\x0cSince 1997, Service Alliance timekeeping practices have been in accordance\nwith "Standards of Accounting and Financial Reporting for Voluntary\nHealth and Welfare Organizations," specifically "Time Reporting for\nFunctional Expense Accounting" which requires that "Functional expense\ndistribution of compensation of staff members engaged in more than one\nservice during an accounting period requires the accumulation of reliable\ndata upon which such allocations can be made" and that "... accumulation of\ndaily detail time reports is not required in all instances; rather periodic\ntesting of the actual work done by employees ...may provide the data\nneeded to determine allocations."\n\nService Alliance employees record actual time worked for the time reporting\nperiod on their timesheets. On the timesheets, employees allocate time\nworked to cost objectives based on time-studies (periodic testing of actual\nwork performed by employees) that are periodically reviewed and\nincorporated into budget projections. Employees are aware of the allocation\nand the Executive Director reviews the time allocations in accordance with\nOMB Circular A-122 m (Support of Salaries & Wages [c]) that states "...the\nreports must be signed by a responsible supervisory official having first hand\nknowledge of the activities performed by the employee, that the distribution\nof activity represents a reasonable estimate of the actual work performed by\nthe employee during the periods covered by the reports." If the reports do\nnot reflect a reasonable distribution of actual work performed, the Executive\nDirector will initiate adjustments.\n\nRISA employs a small staff of 5 (only 2 full-time) who perform indirect\ngrant administration type functions that only benefit the CNCS funded\nprograms we serve. Staff functions include program and fiscal monitoring,\ntraining and technical assistance, and evaluation and reporting among others.\nIn our case completion of daily detailed time reports is not necessarily\ninformative or practical. For example, on one day our Office Manager may\nprocess Accounts Payable issuing 40 checks to a variety of organizations,\nincluding AmeriCorps and Learn & Serve subgrantees and various vendors\n(i.e. PDAT and Disability consultants and trainers). On the same day she\ncould answer 20 telephone inquiries from a variety of sources. In practice, it\nis not a practical or productive exercise for the Office Manager to attempt to\nallocate her time (on her timesheet) to this level of detail on a daily basis.\nThis example holds true for RISA staff. Our current practice described\nabove (or as supplemented by a level of effort certification by RISA staff) is\nboth practical and accurate resulting in a reasonable distribution of the actual\n\x0cwork performed and an acceptable approach in accordance with OMB\nCircular A- 122.\n\n\nRISA Response to Finding No. 5\nWe disagree with Audit finding Number 5. The audit report erroneously\nclaims that some subrecipients were paid living allowances in excess of\nauthorized amounts and that this contributes to a "collectively material\nnoncompliance" and "internal control weakness."\n\nNot only is the questioned amount immaterial (representing .07% of total\nAmeriCorps Funds claimed--$4,664/$6,449,155), it is also allowable as (1)\nthe stipends paid did not exceed the AmeriCorps cap or limitation on\nstipends, (2) members were still in service andlor had a longer length of\nservice than their peers, (3) member service occurred within the allowable\n12-month window, (4) sub-grantee stipend budgets were not exceeded, and\n( 5 ) the subrecipients appropriately met all other criteria including match\nrequirements for stipends.\n\nRISA Response to Finding No. 6\nWhile we acknowledge that some subrecipients exceeded the 20% ceiling\nlimit for training individually, in aggregate, AmeriCorps Program training\nhours were within the ceiling limit with 19.77% of training to total service\nhours (1668 13.66 1843941.80) for the period under review.\n\nIn practice, the training hour limit is difficult if not impossible for programs\nor RISA to monitor in a meaningful way. For example, a large part of\nmember training hours occur prior to members being placed in service. This\npre-service training can average 80 hours per member. Training hours are\nalso recorded on an intermittent basis throughout the year as members attend\nweekly or biweekly trainings as required. Since the training hours are "front\nloaded" in this way, the program can be exceeding the ceiling limit for\nalmost the entire program year. As more and more service hours are accrued\neach month, the ratio of training to service hours declines. It is usually not\nuntil the last quarter of the year when it becomes evident that the ceiling\nlimit will be met. This problem is also compounded by attrition: while\n100% of our AmeriCorps members receive training, a smaller percentage\ncompletes service. Without being able to place a member in service (who\nwould also need training!) or to otherwise increase member service hours to\n\x0coffset the effects of attrition, the only other option is to eliminate training\nthat is necessary for effective service, thus diminishing program quality.\n\nOur subgrantees strive to recruit a diverse corps to work with the diverse\ncommunities we serve. Each member brings their unique perspective,\nexperiences, skills and abilities to our AmeriCorps programs, all\ncontributing to each program\'s success. Understandably, members come\nfrom different socio-economic and educational backgrounds and training\nneeds can vary significantly among members and across programs. On\nbalance, we believe our programs are doing their best to prepare members\nfor service and to recruit a diverse corps without adversely impacting quality\nservice delivery or compromising service hours.\n\nWe believe that, over time, by enforcing the most restrictive interpretation of\nthis grant provision, CNCS would unknowingly be adversely impacting\nprogram diversity and, therefore, quality. For the risk-averse, the surest way\nto avoid exceeding the training ceiling limit is to exclusively or primarily\nrecruit college-educated members. This would have disparate impact on\npoor communities and communities of color as education levels vary\nsignificantly with socio-economic status and not all members would have an\nequal chance to serve. Effective community development efforts are most\neffective when service comes from within and draws from the talents of the\ncommunity.\n\nRISA Response to Finding No. 7\nA discrepancy between recorded and actual match for one sub-grantee does\nnot constitute a "collectively material noncompliance" and internal control\nweakness. While this one sub-recipient made technical errors in reporting\nmatch in its official books and records, it did not result in a "collectively\nmaterial noncompliance and internal control weakness." In this case, the\nsub-grantee provided source documentation to the auditors confirming that\nthe match on the grant was actually met. While we think the sub-grantee\nshould take corrective action, this does not constitute a "collectively material\nweakness," since there is no resulting cost questioned and compensating\ncontrols are clearly in place.\n\nRISA addresses matching requirements during the entire grant life cycle.\nPotential subgrantees are informed of match requirements during our\nRequest for Proposal (RFP) process and during our RFP Training Sessions.\nProgram Directors receive annual training at the Program Director\'s Retreat.\n\x0cAt this training, Program Directors receive a Program Director\'s Manual\nwhich includes our site visit tool (the tool includes specific monitoring steps\nfor match requirements), our drawdown request checklist for match\nrequirements, sample forms to be used to document match, and CNCS grant\nprovisions for match requirements. Each subgrantee must also complete a\n"Fiscal Management Self Reporting Tool" (FMSRT) (included in the\nProgram Director\'s Binder) which includes a separate disclosure section on\nhow the organization accounts for match. The organization also must pass a\nfiscal fitness screening process which includes a review by RISA of the\norganization\'s FMSRT disclosure. We also provide specific training to\nprogram fiscal personnel each year. The fiscal training encompasses\nspecific match reporting and documentation requirements.\n\nIn addition to the above internal controls, RISA monitors match with each\ndrawdown request to be sure it is keeping pace with federal expenditures and\nmeeting match requirements. We also conduct annual site visits over the 3-\nyear grant cycle and review match documentation. This includes a review of\npayroll records to ensure stipends (cash match) are being paid appropriately.\nWe also review source match documentation during our site visits to ensure\nthat the sub-grantee is achieving match (copies of checks and transmittal\nletters, in-kind donation vouchers etc.). Because there is frequently a delay\nin recording in-kind match in the accounting system (and that some in-kind\nmatch is appropriately not recorded in financial statements), we also rely on\nsource documentation during our site visit for verification.\n\nDuring our most recent site visit of the International Gallery, the outside\naccountant was not available to review match documentation with us due to\nhealth issues. Consequently, we noted in our file and to our sub-grantee that\nthis documentation would be required and reviewed before grant closeout,\nwhich in this case is pending. Therefore, any reporting problems would have\nbeen detected before grant closeout and issuance of the Gallery\'s final\nFinancial Status Report.\n\nIt should be noted that RISA\'s review of subgrantee match documentation\noccurs at-a-point-in time during RISA\'s annual subgrantee site visits. On\naverage, site visits are conducted over a 1 or 2 day time period and usually\ninvolve 2 staff members. The site visit covers all aspects of program\noperations, including fiscal and grant compliance. During the period under\nreview, anywhere from 12 to 16 site visits were conducted by RISA on an\nannual basis. We are a small Commission with limited resources (five\n\x0cemployees, only 2 full-time) and correctly rely on our extensive internal\ncontrol procedures and our subgrantee\' s internal controls (including A- 133\naudits) and certifications to reasonably assure that grant requirements are\nbeing met.\n\nIn contrast, the IG\'s review of subgrantee match documentation was a\ndetailed, after-the-fact full scope review of match requirements including\nspecific tests of accounting records and verification procedures at each\nlocation. During the course of this audit, 2 auditors spent an average of 2\nweeks at each of the 8-subgrantee sites audited, not including fieldwork at\nRISA.\n\nWe will follow up to ensure that the situation at the Gallery is corrected. We\nwill continue to monitor this area in our annual site visits and will include\nadditional coverage in our annual subgrantee fiscal training sessions as\nappropriate. However, it is important to note that the purpose of our site visit\nis not to conduct an Inspector General-style audit, nor do we have the\nresources to do so.\n\n\nRISA Response to Finding No. 8\nMissing documentation for certain aspects of member eligibility (Citizenship\nand Education) should not result in a finding of a "collectively material"\nnoncompliance. While it is true that some sub-grantees did not maintain\n adequate documentation for member eligibility in a small number of member\nfiles, the report overstates the issue by classifying this as contributing to a\n material noncompliance.\n\nThe audit report is not specific regarding the number of member files\nreviewed and the number of files that did not contain adequate\ndocumentation (was it 1 of 100 files reviewed? 1 of 250?). It also misleads\nthe reader by suggesting that three sub-grantees did not maintain required\neligibility documentation for their members, when in fact all sub-grantees\nmaintained such documentation, but had several documents missing at the\ntime of the audit. Government Auditing Standards (8.41) specify that\n"giving report users an adequate and correct understanding means providing\nperspective on the extent and significance of reported findings, such as the\nfrequency of occurrence relative to the number of cases or transactions\ntested." The report clearly failed to meet this requirement.\n\x0cCombined, the 4 AmeriCorps subgrantees audited maintained 555 member\nfiles over the period under audit. Based on feedback from these programs,\nthe average member file contains 73 pages of documents. We estimate these\nprograms maintained 40,5 15 pages of documents it total, not considering\nother program documentation maintained outside the member files.\n\nThe audit report is inaccurate in its assertion that "Without complete\nmember files, RISA cannot verify that member eligibility requirements are\nbeing met" when in fact all of our sub-grantees have systems for maintaining\nfiles which we can -and do- readily review during site visits to determine\nwhether or not eligibility documentation is appropriate. When such\ndocumentation is missing we routinely take appropriate corrective action in\naccordance with our own established policies and procedures. Since such\npolicies were made available to auditors, it should have been obvious that\nappropriate checks and monitoring systems were in place, not to prevent but\nto immediately address human errors, which invariably occur.\n\nFurthermore, all costs questioned relating to citizenship eligibility (the\nmajority of questioned costs) were already evidenced in our site visit\nreports and continue to be actively monitored and pursued; the audit\nonly confirmed our own findings. RISA requires subgrantees to back out\nineligible costs from final claims at or prior to closeout. Because of the OIG\naudit, RISA delayed closeout to provide greater flexibility to auditors and to\ndiscourage confusion at the subgrantee level. The Service Alliance did not\nfail to act, the audit occurred while the monitoring process was still in\nprogress and on track to successful completion. As planned, eligibility\nissues remaining at the time of closeout will be backed out of the sub-\ngrantees\' final claims, corrected on the final FSRs, and refund checks will be\nissued to CNCS with final closeout documents.\n\nAs discussed at the exit briefing, we conduct extensive training for our sub-\ngrantees annually (both Program Directors and Fiscal Staff) and this is\nclearly documented. The purpose of the training is to make sure sub-\ngrantees are well versed in AmeriCorps requirements and have the tools they\nneed to ensure compliance. A Program Director\'s binder is provided that\nincludes the grant provisions as well as copies of RISA\'s site visit tools.\nThe binder also includes examples of appropriate immigration forms and\ndocumentation, member file checklists, sample member contracts and other\nexamples of best practices.\n\x0cWe also conduct comprehensive annual site visits of each sub-grantee and\ndid so during the time period under review. We use a site visit tool (similar\nto an audit program) that is provided to our sub-grantees in their Program\nDirector\'s Binder. The site visit tool includes both programmatic and\ncompliance checklists. We perform a 100% member file review for\ncitizenship eligibility. On a test basis we take a random sample of member\nfiles and verify both that eligibility documentation exists and that it is\nadequate (age, education, etc). We also review member files for other\nattributes, examine financial records for compliance and documentation,\ninterview AmeriCorps members, staff, and make observations at service\nsites. The sub-grantee is put on notice of any deficiencies in a site visit\nreport. In the case of missing documentation, the policy of the Service\nAlliance is that all outstanding issues need to be rectified at or prior to\ncloseout. Our sub-grantees have been actively seeking any missing\ndocumentation in anticipation of this process and some of this\ndocumentation has been provided to the auditors for examination during the\naudit.\n\n\nRISA Response to Finding No. 9.\n"Two subrecipients exceeded the mandated AmeriCorps provisional\nceiling of 5 percent on administrative costs chargeable to grants."\n\nWe disagree that the condition described in the audit finding results in a\n"collectively material noncompliance" and internal control weakness. Not\nonly is the amount described immaterial (representing .09% of total\nAmeriCorps Funds claimed--$6,055/$6,449,155), half of the amount cited as\na noncompliance was in fact authorized and in accordance with CNCS\nguidelines. The remaining amount in question was the result of a\nbookkeeping error in a subrecipient\'s accounting system. This error, which\nwould have been detected following routine review of the program\'s final\ndrawdown request, has since been corrected.\n\nIn the case of the Public Education Fund, its\' 02-03 administration expenses\nwere both authorized and allowable. While other budget changes were made\nduring the program year, reductions were not made to the administrative\nbudget due to the impact of the enrollment freeze in accordance with CNCS\nguidelines. CNCS issued the guidance as a result of the CNCS\' 02-03\nmember enrollment freeze that prevented programs from enrolling members\nalthough they had received grant awards and were fully staffed for that\n\x0cspecific purpose. The guidance was issued in recognition that organizations\nhad fixed costs that they were not able to avoid because the Corporation\nunilaterally froze enrollment. We explained this to the auditors during the\naudit and provided them with a copy of the relevant CNCS guidance.\n\nInternational Gallery for Heritage & Culture. The International Gallery\nmade a bookkeeping error in posting administrative expenses to the grant.\nThe Gallery has already made an adjusting entry in their books and records.\nThe correction will be reflected in the Corporation\'s Web Based Reporting\nSystem (WBRS) and in the final Financial Status Report on closeout. We\nmonitor the administrative ceiling limits when we review each drawdown\nrequest. While the Gallery has not submitted a final drawdown request that\nreflected the limit was exceeded, the program did update their Periodic\nExpense Report in WBRS that reflected the bookkeeping error. Our\ncloseout certification process also provides final verification procedures to\nassure match requirements are met and documented and that expenditures\nare within administrative limits on the grant. This grant is subject to\ncloseout. This error would have been detected with the final drawdown\nrequest and in the closeout certification process.\n\nIn any case, as stated in the audit report, this 5% limit is administered on a\ngrant-wide basis. We are fully in compliance with the 5% grant-wide limit.\n\nRISA Response to Finding No. 10\nMisc. non compliance documentation issues.\nWe disagree with the opinion that Compliance Finding No. 10 ("some\nAmeriCorps member files were missing required documentation") can be\ninterpreted as contributing to a "collectively material noncompliance." The\nreport finding does not provide appropriate perspective on the significance\nof the reported finding. Subgrantees have systems in place for member files.\nCombined, the 4 AmeriCorps subgrantees audited maintained more than\n40,000 pages of documentation for the period under review. Government\nAuditing Standards (8.41) specify that "Giving report users an adequate and\ncorrect understanding means providing perspective on the extent and\nsignificance of reported findings, such as the frequency of occurrence\nrelative to the number of cases or transactions tested.. . \'\n 9\n\n\n\n\nAll subgrantees funded by the Service Alliance have systems in place that\nare fully consistent with all federal and state grant provisions. During on-site\nvisits conducted by the Service Alliance staff, we monitor subgranteest use\n\x0cof the established systems by reviewing member files individually and\nassessing the overall condition of subgrantees\' files. The fact that some\nrequired documents were missing from the files of several members does not\nmean that the systems that our subrecipients have in place are not adequate\nor contribute to a collectively material weakness. The fact that most member\nfiles had all required documentation suggests not only that existing systems\nare adequate, but also that the Service Alliance is successful in ensuring that\nthese systems are used consistently.\n\nSubgrantees maintain extensive member files and have systems and\nchecklists in place to track receipt and completeness of required\ndocumentation. Combined, the subgrantees listed in Audit Schedules A-1 to\nA-4 maintained 555 member files during the 3-year period under review.\nOn average, each subgrantee member file contained 72 pages of\ndocumentation representing a total of 4O,5 15 pages of documents. This\ndocumentation includes, but is not limited to, member contracts, member\nhandbooks, position descriptions, applications, reference checks, interview\nnotes, emergency contact information, healthcare enrollment forms or\nwaivers, acceptance letters, mid- and end- of term performance evaluations,\ncitizenship, education and age eligibility documentation, 1-9 and W-4 forms\nfor members, enrollment forms, exit forms, and required certification among\nothers.\n\nAs explained in our response to Finding No. 7 and 8, and in addition to\nsubgrantee internal controls, RISA has extensive monitoring policies (CNCS\nStandards and Pre-Audit Survey approved), procedures and practices in\nplace. These procedures include an annual review of member files at each\nsubgrantee site. RISA conducts annual subgrantee site visits over a 1 to 2\nday time period by 2 staff members. During the period under review,\nanywhere from 12 to 16 site visits were conducted by RISA on an annual\nbasis. In contrast, 2 IG auditors spent an average of 2 weeks at each of the 8-\nsubgrantee sites audited, not including fieldwork at RISA.\n\nWhile we appreciate the auditors\' concern that some files were missing\ndocumentation, and the suggestion that we utilize their procedures for\nmonitoring subgrantees, no level of external review can provide complete\nassurance that all documents will be included in each file, especially\nconsidering the sheer volume of paperwork involved.\n\x0cWe are a small Commission with limited resources (five employees, only 2\nfull-time) and correctly rely on our extensive internal control procedures and\nour subgrantee\'s internal controls (including A- 133 audits) and certifications\nto reasonably assure that grant requirements are being met. The purpose of\nour site visit is not to conduct an Inspector General - style audit, nor do we\nhave the resources to do so.\n\n\nRISA Response to Finding No. 11\n"Based on AmeriCorps Provisions 7c and 7h, training offered to\nmembers should relate directly to the program\'s objectives in the\ncommunity, not to the member\'s personal training needs or desires.\nProvision 7h mandates a support system for members to obtain a GED\nor higher education including counseling members on GED courses, or\nhow to apply to colleges, but it bars the use of service time to be used for\nsuch training.\n\nWe disagree with the audit finding: it is inaccurate and does not result in a\n"collectively material noncompliance."\n\nThe finding inaccurately implies that member service time was used for\nGED training when in fact member training; time was appropriately used for\nGED training. The audit misstates and misinterprets the cited grant\nprovisions to argue for disallowance of GED training time as they consider it\nunrelated to program objectives and believe GED training is provided only\nto meet a member\'s personal training needs and desires.\n\nFirst, the auditor is misrepresenting the cited grant provisions; the specific\nlanguage of the provisions follows:\n\n 7c. Training. Consistent with the approved budget, the grantee must\n provide members with the training, skills, knowledge and supervision\n necessary to perform the tasks required in their assigned project\n positions, including specific training in a particular field and\n background information on the community served.\n\n The Grantee must conduct an orientation for members and comply\n with any pre-service orientation or training required by the\n Corporation. This orientation should be designed to enhance member\n security and sensitivity to the community. Orientation should cover\n\x0c member rights and responsibilities, including the Program\'s code of\n conduct, prohibited activities, requirements under the Drug-Free\n Workplace Act, suspension and termination from service, grievance\n procedures, sexual harassment, other non-discrimination issues and\n other topics as necessary.\n\n 7h. Support Services. The Grantee must provide specific support\n services to members who are school dropouts by assisting them in\n earning the equivalent of a high school diploma; and to members who\n are completing a term of service and are making the transition to other\n education and career opportunities.\n\nThe cited provisions do not state that training should only benefit the\nprogram and not benefit the member. The provision does not bar the use of\nGED time as training time. This longstanding practice in Rhode Island has\nbeen fully and traditionally authorized by CNCS and not barred by\nAmeriCorps Provisions as asserted in the audit.\n\nAdditionally, a member\'s pursuit of a GED absolutely relates directly to the\nprogram\'s objectives in the community. National and Community Service\nfunding in the state of Rhode Island is exclusively earmarked for education\nrelated programs. Members largely work with children in school and in\nafter-school settings implementing tutoring, literacy, stay-in-school,\nhomework clubs, and other similar programs. It is absurd to imply that this\ntraining is simply to meet a member\'s personal training needs and desires.\nPrograms train members so they will be prepared to deliver impactful\nservices to the community and prepared for success in their own lives.\nTraining is dictated by AmeriCorps requirements and program, partner\nagency, and service recipient needs. At the same time programs cannot\nignore the fact that members come from a variety of backgrounds and\ntraining plans are appropriately tailored so both individually and collectively\nmembers are prepared to serve.\n\nIt comes as no surprise to us that some training offered by AmeriCorps\nPrograms may personally benefit AmeriCorps members. We can all\nacknowledge that, to some extent, people personally benefit from most\nlearning experiences. Likewise, AmeriCorps members may personally\nbenefit from both their AmeriCorps training and the AmeriCorps Service\nexperience itself. Grant provisions do not prohibit member learning and\ngrowth; they encourage it.\n\x0cSince Rhode Island\'s AmeriCorps portfolio is entirely education-focused, it\nis not a coincidence that programs attract individuals interested in education,\nteaching, and working with children. Often a member\'s personal training\nneeds and desires may overlap with a program\'s training plan. We consider\nthis circumstance serendipitous and a beneficial aspect of AmeriCorps that\npositively contributes to member service, retention and development. It is\nabsurd to suggest otherwise.\n\nRISA Response to Finding No. 12\n"The RISA financial management system does not have an adequate\ndisasterhack-up plan.\n\nThe audit report is inaccurate in its assertion that "RISA\'s Financial\nManagement System does not have an adequate disasterhack-up plan"\nand that this finding results in an internal control weakness. Although\nRISA does not have a formal written disaster plan, we have made provisions\nfor an accounting disaster and have an adequate protocol in place. Copies of\nthe cash disbursement journal, cash receipts journals, general journal and\nledger are kept off premises in our CPA\'s office. (Executive Director was\nnot aware that copies of the cash disbursement journal have been kept at our\nCPA\'s office at the time of the formal entrance conference.) The bank stores\ncopies of our checks. Finally, a computer back up disc is burned bi-weekly\nand kept in a fireproof safe off-site. We will commit our current practice to\nwriting to provide documentation of our established procedures.\n\n\nRISA Comments on Questioned Costs\n\nCity Year (Schedule A-1), RI Children\'s Crusade for Higher Education\n(Schedule A-2)\' Parents Making A Difference Program (Schedule A-3),\nInternational Gallery for Heritage & Culture (Schedule A-4).\n\nQuestioned costs related to the above subgrantees are contained in the\nreferenced audit schedules. Our subgrantees have provided specific\ncomments related to cost questioned in Attachments 1 to 4. Additionally, as\ndiscussed in our responses to individual Audit Findings:\n\n AmeriCorps Members Compliance Issues $84,488 and related\n questioned education awards $32,580.\n\x0cWhile some subgrantees\' documentation was missing at the time of\nissuance of this audit report (similar findings regarding missing\ndocumentation for citizenshiplresidency status was included in our\nown site visit reports), our subgrantees have been actively seeking\nmissing documentation (see our response to Audit Finding No. 8 and\nsubgrantee responses include as Attachments 1.a.1, 1.a.2, and as\nAttachments 3 and 4). We believe that some of the costs questioned\nwill be in fact supported during the audit resolution process and\nbefore grant closeout. Indeed, in response to the audit findings, The\nEducation Partnership (successor fiscal agent of the Parents Making A\nDifference program) provided additional documentation to the IG\nauditors that they believe will reduce the member compliance cost\nquestioned by $22,876 (see Attachment 3).\n\nAlso, with regard to questioned education awards, many of these\nawards have been placed on hold by the Trust based on notification\nfrom the Service Alliance as a result of missing documentation noted\nat site visits. Therefore, the "cost questioned" is overstated as these\neducation award expenses will not materialize even if the subgrantee\ncannot provide required eligibility documentation.\n\nPlease note we do not agree with the Education Partnership\'s\nassertion (Attachment 3) that ineligibility issues identified during\nRISA site visits were resolved with PMD Program Directors.\n Outstanding issues with program documentation remained and\nneeded to be resolved before closeout. The program was notified of\nRISA\'s site visit findings during each site visit and through written\n site visit reports provided to the program. The PMD program did not\n receive funding for program year 03-04. The program was disbanded\n and all records were sent to the Education Partnership as successor\nfiscal agent. RISA notified the Education Partnership\'s new Finance\n Director of the outstanding documentation that would be needed prior\n to closeout. Apparently, the Finance Director was not aware of the\n outstanding issues prior to that date. In any case, we view this as an\n internal communication problem at the program and fiscal agent\n level.\n\n\nMember Training Costs in Excess of 20% Ceiling $55,638\nWhile we acknowledge that some subrecipients exceeded the 20%\n\x0c ceiling limit for training individually, in aggregate AmeriCorps\n Program training hours were within the ceiling limit with 19.77%\n training to total service hours. See our detailed response to Audit\n Finding No. 5 included and subgrantee responses included as\n Attachments lb, 2 and 3.\n\n Please note we do not agree with the Education Partnership\'s\n assertion that "The Rhode Island Service Alliance reviewed and\n authorized these expenses in their fieldwork." We believe this is a\n misconception. RISA reviews program training plans to ensure that\n training meets CNCS grant provision requirements. Also, on a test\n basis, RISA reviews expense documentation during site visits to veriJL\n they are authorized and allowable and agree with information\n reported to RISA and CNCS. We do not "authorize\'\' expenditures\n during our site visits.\n\n Living Allowance Payments in Excess of Limits $4,664\n We don\'t agree that "some subrecipients were paid living allowances\n in excess of authorized amounts," as noted in our detailed response to\n Audit Finding No. 5. See also subgrantee responses included as\n Attachments lc, 3, and 4.\n\n Questioned Staff Salaries (Net) $2,008\n Please see individual subgrantee responses included in Attachments\n Id and 2.\n\n Administrative Costs Related to Cost Questioned $2,161\n A final determination will be made during the audit resolution process\n as questioned administrative costs would be applied only to\n questioned costs remaining at that time and as applicable.\n\n\nRISA Comments on Audit Report Presentation\n\nBasis of Accounting Section - draft audit report page 10\nThe audit report is inaccurate in its description of our Basis of Accounting\nfor Equipment (draft audit report page 10). In 1994, RISA\' s Board\napproved a policy to capitalize all equipment purchases over $1,000 and\ndepreciate them over their useful life. This is evidenced in RISA\'s audited\n\x0cfinancial statement, specifically the Statement of Financial Position (see\nequipment.)\n\nDefinition of Questioned Costs - draft audit report pages 1 & 11\nThe definition of questioned costs used in the audit report (pages 1 and 11)\nis misleading and does not agree with the standard A-133 and 7CFR\ndefinitions of questioned costs. Government Auditing Standards (GAS)\nrequire that the audit report be accurate (8.43), objective and not misleading\n(8.46).\n\nThe draft audit report asserts questioned costs were expended in "violation\nof laws" when the A-133 and 7CFR definitions use different language:\n"<questioned costs are costs> which resulted from a violation or possible\nviolation of a provision of a law.. ." This is an important distinction, as the\ndefinition as its stands implies that laws (and not provisions of laws) were\nviolated, not possibly violated.\n\nAlso, on page 11, the same non-standard definition of questioned costs\nimmediately precedes a listinglpresentation of questioned costs.\n\n"Questioned costs are costs for which there is documentation that the\nrecorded costs were expended in violation of laws, regulations or specific\nconditions of the awards, or those costs which require additional support by\nthe grantee, or costs which require interpretation of allowability by the\nCorporation."\n\nGrammatically the definition employs parallelism by using the word "or" in\nits sentence structure: there is an implicit hierarchy of value in this clause.\nAs such, this sentence is misleading in that it implies that questioned costs\nwere largely in violation of the law, secondarily in violation of specific\nconditions of the awards, or costs which require additional support by the\ngrantee, and lastly that they were costs which may require interpretation of\nallowability by the Corporation. This is misleading, as "questioned costs"\nlisted in the draft report appear largely to be matters of lack of\ndocumentation or, perhaps, interpretation.\n\nCompliance Section- draft audit report Page 3\nThe audit cites "instances of noncompliance with Federal laws, applicable\nregulations and award conditions." Again, the auditor\'s interpretation is not\n\x0ca noncompliance with a "provision of a law" but with "Federal laws"\nthemselves. This is inaccurate.\n\nThe audit report enumerates 11 instances of noncompliance that are\n"collectively" considered to be material. If this is the case, the audit findings\nshould be numbered la, lb, l c etc. so as to put audit findings in an\nappropriate context in accordance with Government Auditing Standards on\nObjectivity (see below). In the current audit report presentation, it is difficult\nto discern any difference between the prior audit report version that cited all\nthese items as "material" instances of noncompliance and the most recent\nversion where they are considered "collectively material" but the weight of\ntheir presentation in the audit report is unchanged.\n\n\nObjectivity\nGovernment Auditing Standards (8.46 - 8.53) on "Objectivity" require that\nthe entire audit report be balanced in content, that it should not be\nmisleading and that it should place the audit results in perspective and\ncontext. This includes recognition of the positive aspects of the program\nreviewed if applicable to the audit objectives. (Please note: the Audit\nPrograrn/Objectives (3 1 pages) required review of many aspects of\nCommission and subgrantee operations including the Commission\'s\nSelection of Subgrantees, RISA\'s administration and monitoring of grant\nfunds and subgrantees and AmeriCorps Member Service and Program\nAccomplishments.)\n\nAs currently presented, we strongly believe that the audit report is not\nobjective. As supported by our responses to audit findings and comments\nregarding audit report presentation, the report is clearly not balanced in\ncontent, in certain sections the audit report is misleading, and audit findings\nare not placed in appropriate context. Additionally, the audit report does not\nrecognize any positive aspects of the programs under audit, of which there\nare many, and this was directly applicable to audit objectives.\n\x0c Appendix B\n\n\nResponse of the Corporation for National and Community Service\n\x0c Corporation for P\n\n\n\n\nTo: J. Russell George, Inspectofleneral\n\n\nFrom:\n\nCc: ~ich&illemin, w;:\n Rosie Mauk, Director of Am\n s Management\n\n officer\n\n\n\nDate: August 23,2004\n\n\nSubject: Response to OIG Draft Audit Report 04-22, Audit of Corporation for\n National and Community Service grants awarded to the Rhode Island\n Service Alliance\n\n\nWe have reviewed the draft audit report of the Rhode Island Service Alliance grants.\nDue to the limited timeframe for response, we have not yet conducted a comprehensive\nreview nor analyzed documentation from the Rhode Island Commission supporting the\nquestioned costs. We will respond to all findings and recommendations when the audit is\nissued and we have reviewed the findings in detail.\n\n\n\n\n 1201 New York Avenue, NW *\n Washington, DC 20525\n 202-606-5000 + www.nationalservice.org\n Freedom Corps\n Senior Corps + AmeriCorps * Learn and Serve America The Resident\'s Call to ~ c K i c e\n\x0c'