jurisdiction: US

text: b" Office of Inspector General\n Corporation for National and\n Community Service\n\n\n\n\n AGREED-UPON PROCEDURES OF CORPORATION FOR\n NATIONAL AND COMMUNITY SERVICE GRANTS\n AWARDED TO SERVEMINNESOTA\n\n OIG REPORT 08-14\n\n\n\n\n Prepared by:\n\n Mayer Hoffman McCann P.C.\n Conrad Government Services Division\n 12761 Darby Brooke Court, Suite 201\n Woodbridge, Virginia 22192\n\n\n\n\nThis report was issued to Corporation management on March 28, 2008. Under the laws\nand regulations governing audit follow-up, the Corporation is to make final\nmanagement decisions on the report\xe2\x80\x99s findings and recommendations no later than\nSeptember 29, 2008 and complete its corrective actions by March 28, 2009.\nConsequently, the reported findings do not necessarily represent the final resolution\nof the issues presented.\n\x0c NATIONAL&:\n COMMUNITY\n SERVICEr..U X:\n OFFICE OF INSPECTOR GENERAL\n\n\n March 28, 2008\n\n\nTO: Kristin McSwain\n Director, AmeriCorps*State and National\n\n Margaret Rosenberry\n Director, Office of Grants Management\n\n\nFROM: Carol Bates c....~~\xc2\xa3y.:::fl:g,\n Assistant Inspector General for Audit\n\n\nSUBJECT: Report 08-14, Agreed-Upon Procedures of Corporation for National and\n Community Service (Corporation) Grants Awarded to ServeMinnesota\n\n\nWe contracted with the independent certified public accounting firm of Mayer Hoffman\nMcCann P.e. (MHM) to perform agreed-upon procedures in its review of Corporation grants\nawarded to ServeMinnesota. The contract required that MHM conduct its review in\naccordance with generally accepted goverrunent auditing standards.\n\nMHM is responsible for the attached report, dated March 6, 2008, and the conclusions\nexpressed therein. We do not express opinions on the ServeMinnesota's Consolidated\nSchedule of Award costs; conclusions on the effectiveness of internal controls; or compliance\nwith laws, regulations, and grant provisions.\n\nUnder the Corporation's audit resolution policy, a final management decision on the findings\nin this report is due by September 29, 2008. Notice of final action is due by March 28,2009.\n\nIf you have questions pertaining to this report, please call me at 202-606-9356.\n\nAttachment\n\ncc: Audrey Suker, Executive Director, ServeMinnesota\n William Anderson, Deputy Chief Financial Officer\n Sherry Blue, Audit Resolution Coordinator\n Ronald E. Rolwes, CPA, CFE, Shareholder, Mayer Hoffman\n McCann P.C., Conrad Goverrunent Services Division\n\n\n 1201 New York Avenue, NW* Suite 830, Washington, DC 20525\n 202-606-9390 * Hotline: 800-452-8210 * www.cncsoig.gov us~~-=\n Freedom Cor\xc2\xb7\n Senior Corps * AmeriCorps * Learn and Serve America JV.ake a Difference. Volunt\n\x0c AGREED-UPON PROCEDURES OF CORPORATION FOR NATIONAL AND COMMUNITY\n SERVICE GRANTS AWARDED TO SERVEMINNESOTA\n\n Table of Contents\n\n Page\n\nExecutive Summary 1\n\nIndependent Accountants\xe2\x80\x99 Report on Applying Agreed-Upon Procedures 6\n\n Results \xe2\x80\x93 Costs Claimed 7\n\n Consolidated Schedule of Award Costs 8\n\n Exhibit A: Schedule of Award and Claimed Costs \xe2\x80\x93 AmeriCorps 9\n Grants\n\n Schedule A-1 \xe2\x80\x93 Duluth Area Family YMCA 10\n\n Schedule A-2 \xe2\x80\x93 Minnesota Literacy Council 11\n\n Schedule A-3 \xe2\x80\x93 CommonBond Communities 13\n\n Schedule A-4 \xe2\x80\x93 Red Lake Band of Chippewa Indians 14\n\n Schedule A-5 \xe2\x80\x93 St. Paul Neighborhood Network 15\n\n Schedule A-6 \xe2\x80\x93 Admission Possible 16\n\n Exhibit B: Schedule of Award and Claimed Costs \xe2\x80\x93 Administrative 17\n Grant\n\n Exhibit C: Schedule of Award and Claimed Costs \xe2\x80\x93 PDAT Grant 18\n\n Exhibit D: Schedule of Award and Claimed Costs \xe2\x80\x93 Disability Grant 19\n\n Results \xe2\x80\x93 Compliance and Internal Control 20\n\nAppendix A \xe2\x80\x93 ServeMinnesota\xe2\x80\x99s Response to Draft Report\n\nAppendix B \xe2\x80\x93 Corporation for National and Community Service\xe2\x80\x99s Response to\n Draft Report\n\x0c EXECUTIVE SUMMARY\n\n\n\n\nThe Office of Inspector General (OIG), Corporation for National and Community Service\n(Corporation), contracted with Mayer Hoffman McCann P.C. (MHM) to perform agreed-\nupon procedures of grant cost and compliance for Corporation-funded Federal assistance\nprovided to ServeMinnesota.\n\nResults\n\nAs a result of applying our procedures, we questioned claimed Federal-share costs of\n$56,847, matching costs of $104,648, and education awards of $10,450. A questioned cost is\nan alleged violation of provision of law, regulation, contract, grant, cooperative agreement,\nor other agreement or document governing the expenditure of funds; or a finding that, at the\ntime of testing, such cost is not supported by adequate documentation. The detailed cost\nresults of our agreed-upon procedures are presented in the Consolidated Schedule of Award\nCosts and supporting exhibits and schedules.\n\nServeMinnesota claimed total costs of $10,777,650 from April 1, 2005, through June 30,\n2007. As a result of testing a judgmentally selected sample of transactions, we questioned\ncosts claimed, as shown in the following table.\n\n\n\n\n 1\n\x0c Federal Grant Education\n Description by Grant Share Match Award\n 03ACHMN001\n Unsupported Costs $ 23,078 $ 64,743 $ -\n Credits Not Applied - 3,116 -\n Cost Claimed to the Wrong Grant 1,777 6,182 -\n Costs Questioned for Allowability 25 5,459 -\n Unsupported Member Service Hours - - 9,450\n Costs Not in the Approved Budget 19,911 22,515 -\n Subtotal $ 44,791 $ 102,015 $ 9,450\n\n 04AFHMN001\n Unsupported Costs $ 411 $ 1,548 $ -\n Credits Not Applied 417 1,367 -\n Costs Claimed to the Wrong Grant 5,876 (282) -\n Unsupported Member Service Hours - - 1,000\n Subtotal $ 6,704 $ 2,633 $ 1,000\n\n 06CAHMN001 - Costs Questioned for Allowability $ 1,106 $ - $ -\n\n\n 06PTHMN001 - Cost Questioned for Allowability $ 2,646 $ - $ -\n\n 06CDHMN001 - Cost Questioned for Allowability $ 1,600 $ - $ -\n\n\n Total $ 56,847 $ 104,648 $ 10,450\n\n\nThe procedures we performed did not result in questioned costs for the Education Award\nGrant (05ESHMN001).\n\nAmeriCorps members who successfully complete terms of service are eligible for education\nawards and accrued interest awards (interest forbearance) funded by the National Service\nTrust. These award amounts are not funded by Corporation grants and thus are not costs\nclaimed by ServeMinnesota. As part of our agreed-upon procedures, however, we\ndetermined the effect of audit findings on eligibility for education and accrued interest\nawards. Using the same criteria described above, we questioned education awards of\n$10,450 due to non-compliance with program requirements, but did not question accrued\ninterest awards.\n\nDetails related to these questioned costs and awards appear in the Independent Accountants\xe2\x80\x99\nReport on Applying Agreed-Upon Procedures that follows.\n\n 2\n\x0cThe detailed results of our agreed-upon procedures revealed instances of non-compliance\nwith grant provisions, regulations, or Office of Management and Budget (OMB)\nrequirements, as shown below under the Compliance and Internal Control section. Issues\nidentified included:\n\n \xe2\x80\xa2 Lack of controls or controls not implemented over reporting and recording of\n Federal and match costs;\n\n \xe2\x80\xa2 Costs questioned for allowability;\n\n \xe2\x80\xa2 Late and missing member forms, progress reports, expense reports, and\n Financial Status Reports (FSR);\n\n \xe2\x80\xa2 Lack of adequate procedures to ensure that members signed their contracts\n before starting service and that the subgrantees entered enrollment\n information into the Web-Based Reporting System (WBRS) in a timely\n manner; and\n\n \xe2\x80\xa2 Costs claimed were not in the approved budget.\n\nBackground\n\nThe Corporation, pursuant to the authority of the National Community Service Trust Act of\n1993, as amended, awards grants and cooperative agreements to State commissions, such as\nServeMinnesota, and other entities to assist in the creation of full-time and part-time national\nand community service programs.\n\nServeMinnesota is located in Minneapolis, Minnesota. In 2002, it separated from the State\ngovernment and became a non-profit organization. It has been subject to the Single Audit\nAct and has received unqualified opinions on its financial statements and the audit of its\nMajor Federal Awards. ServeMinnesota is staffed with an Executive Director and seven\nemployees and supported by a contractor, who is a chief financial officer.\n\nAll accounting functions are performed in house. ServeMinnesota performs monitoring on\nits subgrantees based on risk. The types of monitoring and how often it occurs depends upon\nthe risk factors at each subgrantee. Tools used for onsite monitoring include program and\nfiscal compliance. In addition to onsite monitoring, ServeMinnesota performs a quarterly\ndesk review of member timesheets and eligibility documentation.\n\nAs illustrated in the following table, ServeMinnesota received grants totaling about\n$17.2 million for various Corporation programs, and claimed costs of about $10.8 million.\nOf the amount of funding authorized, ServeMinnesota awarded approximately $16 million to\nits AmeriCorps subgrantees.\n\n\n\n\n 3\n\x0c Claimed\n Funding Within Testing\n Authorized Period\n 03ACHMN001 \xe2\x80\x93 AmeriCorps Competitive $ 8,605,345 $ 4,929,500\n 06ACHMN001 \xe2\x80\x93 AmeriCorps Competitive 4,370,024 2,218,904\n 04AFHMN001 \xe2\x80\x93 AmeriCorps Formula 3,058,182 2,745,284\n Total AmeriCorps $ 16,033,551 $ 9,893,688\n\n 06CAHMN001 \xe2\x80\x93 Administrative 494,949 376,443\n\n 06PTHMN001 \xe2\x80\x93 PDAT 311,500 225,597\n\n 06CDHMN001 \xe2\x80\x93 Disability 326,410 227,768\n\n 05ESHMN001 \xe2\x80\x93 Education Award Grant 60,000 54,154\n\n Total \xe2\x80\x93 Grants Administered $ 17,226,410 $ 10,777,650\n\n We compared the inception-to-date drawdown amounts with the amounts reported in the last\n FSR submitted to each grant and determined that the drawdowns were reasonable.\n\n Agreed-Upon-Procedures Scope\n\n The agreed-upon procedures covered the allowability, allocability, and reasonableness of\n financial transactions claimed under funding provided by the Corporation for the following\n awards, as well as grant match costs. We also performed tests to determine compliance with\n grant terms and provisions. We performed our agreed-upon procedures during the period\n August 27 through November 7, 2007.\n\n Program Award Number Award Period Testing Period\nAmeriCorps \xe2\x80\x93 Competitive 03ACHMN001 09/01/03 \xe2\x80\x93 08/31/06 04/01/05 \xe2\x80\x93 08/31/06\nAmeriCorps \xe2\x80\x93 Competitive 06ACHMN001 08/10/06 \xe2\x80\x93 09/09/09 08/10/06 \xe2\x80\x93 03/31/07\nAmeriCorps \xe2\x80\x93 Formula 04AFHMN001 08/01/04 \xe2\x80\x93 10/31/07 04/01/05 \xe2\x80\x93 03/31/07\nAdministrative 06CAHMN001 01/01/06 \xe2\x80\x93 12/31/09 01/01/06 \xe2\x80\x93 06/30/07\nPDAT 06PTHMN001 01/01/06 \xe2\x80\x93 12/31/08 01/01/06 \xe2\x80\x93 06/30/07\nDisability 06CDHMN001 01/01/06 \xe2\x80\x93 12/31/08 01/01/06 \xe2\x80\x93 06/30/07\nEducation Award 05ESHMN001 08/01/05 \xe2\x80\x93 07/31/08 08/01/05 \xe2\x80\x93 06/30/07\n\n The procedures performed, based on the OIG\xe2\x80\x99s agreed-upon-procedures program dated\n February 2007, have been included in the Independent Accountants\xe2\x80\x99 Report on Applying\n Agreed-Upon Procedures section of this report.\n\n\n\n\n 4\n\x0cExit Conference\n\nThe contents of this report were discussed with the Corporation and ServeMinnesota at an\nexit conference held in Minneapolis, Minnesota, on November 27, 2007. In addition, we\nprovided a draft of this report to ServeMinnesota and to the Corporation for comment on\nFebruary 5, 2008. ServeMinnesota generally did not address the recommendations but its\nresponse to the findings in the draft report are included in Appendix A and summarized in\neach finding. The Corporation did not respond to the individual findings and\nrecommendations. Its response is in Appendix B.\n\n\n\n\n 5\n\x0c Conrad Government Services Division\n\n\n\n Inspector General\n Corporation for National and Community Service\n\n\n INDEPENDENT ACCOUNTANTS\xe2\x80\x99 REPORT ON\n APPLYING AGREED-UPON PROCEDURES\n\n We have performed the procedures described below, which were agreed to by the OIG solely\n to assist it in grant-cost and compliance testing of Corporation-funded Federal assistance\n provided to ServeMinnesota for the awards and periods listed below. This agreed-upon\n procedures engagement was performed in accordance with standards established by the\n American Institute of Certified Public Accountants and generally accepted government\n auditing standards. The sufficiency of these procedures is solely the responsibility of the\n OIG. Consequently, we make no representation regarding the sufficiency of the procedures\n described below, either for the purpose for which this report has been requested or any other\n purpose.\n\n Program Award Number Award Period Testing Period\nAmeriCorps \xe2\x80\x93 Competitive 03ACHMN001 09/01/03 \xe2\x80\x93 08/31/06 04/01/05 \xe2\x80\x93 08/31/06\nAmeriCorps \xe2\x80\x93 Competitive 06ACHMN001 08/10/06 \xe2\x80\x93 09/09/09 08/10/06 \xe2\x80\x93 03/31/07\nAmeriCorps \xe2\x80\x93 Formula 04AFHMN001 08/01/04 \xe2\x80\x93 10/31/07 04/01/05 \xe2\x80\x93 03/31/07\nAdministrative 06CAHMN001 01/01/06 \xe2\x80\x93 12/31/09 01/01/06 \xe2\x80\x93 06/30/07\nPDAT 06PTHMN001 01/01/06 \xe2\x80\x93 12/31/08 01/01/06 \xe2\x80\x93 06/30/07\nDisability 06CDHMN001 01/01/06 \xe2\x80\x93 12/31/08 01/01/06 \xe2\x80\x93 06/30/07\nEducation Award 05ESHMN001 08/01/05 \xe2\x80\x93 07/31/08 08/01/05 \xe2\x80\x93 06/30/07\n\n We were not engaged to, and did not perform an examination, the objective of which would\n be the expression of an opinion on management\xe2\x80\x99s assertions. Accordingly, we do not express\n such an opinion. Had we performed other procedures, other matters might have come to our\n attention that would have been reported to you.\n\n The procedures that we performed included obtaining an understanding of ServeMinnesota\n and its subgrantee monitoring process; reconciling Federal costs claimed and match costs to\n the accounting systems of ServeMinnesota and of selected subgrantees; reviewing subgrantee\n member files to verify that the records supported member eligibility to serve and allowability\n of living allowances and education awards; testing compliance of ServeMinnesota and a\n sample of subgrantees on selected grant provisions and award terms and conditions; and\n testing claimed grant costs and match costs of ServeMinnesota and a sample of subgrantees\n to ensure: (i) Proper recording of the AmeriCorps grants, Administrative grant, PDAT grant,\n Disability grant, and Education Award grant; (ii) Costs were properly matched; and (iii)\n\n 2301 Dupont Drive, Suite 200 y Irvine, California 92612 y 949-474-2020 ph y 949-263-5520 fx\n 12761 Darby Brooke Court, Suite 201 y Woodbridge, Virginia 22192 y 703-491-9830 ph y 703-491-9833 fx\n\n 6\n\x0cCosts were allowable and supported in accordance with applicable regulations, OMB\ncirculars, grant provisions, and award terms and conditions.\n\n Results \xe2\x80\x93 Costs Claimed\n\nThe testing results of costs are summarized in the Consolidated Schedule of Award Costs and\nthe exhibits and schedules that follow. The schedules also identify instances of questioned\neducation awards. These awards were not funded by Corporation grants, and accordingly are\nnot included in claimed costs. As part of our agreed-upon procedures, however, we\ndetermined the effect of member timesheet and eligibility exceptions on these awards.\n\n\n\n\n 7\n\x0c CONSOLIDATED SCHEDULE OF AWARD COSTS\n\n ServeMinnesota\n\n April 1, 2005, to June 30, 2007\n\n Questioned Questioned\n Approved Claimed Federal Questioned Education\nAward Number Program Budget Costs Costs Match Costs Awards Reference\n03ACHMN001 AmeriCorps \xe2\x80\x93 Competitive $ 8,605,345 $ 4,929,500 $ 44,791 $ 102,015 $ 9,450\n06ACHMN001 AmeriCorps \xe2\x80\x93 Competitive 4,370,024 2,218,904 - - -\n04AFHMN001 AmeriCorps \xe2\x80\x93 Formula 3,058,182 2,745,284 6,704 2,633 1,000\n Total AmeriCorps $ 16,033,551 $ 9,893,688 $ 51,495 $ 104,648 $ 10,450 Exhibit A\n\n06CAHMN001 Administrative 494,949 376,443 1,106 - - Exhibit B\n\n06PTHMN001 PDAT 311,500 225,597 2,646 - - Exhibit C\n\n06CDHMN001 Disability 326,410 227,768 1,600 - - Exhibit D\n\n05ESHMN001 Education Award 60,000 54,154 - - -\n\n Totals $ 17,226,410 $ 10,777,650 $ 56,847 $ 104,648 $ 10,450\n\n\n\n Notes to Consolidated Schedule of Award Costs\n\n Basis of Accounting\n\n The accompanying schedules have been prepared to comply with provisions of the grant\n agreements between the Corporation and ServeMinnesota. The information presented in the\n schedules has been prepared from reports submitted by ServeMinnesota to the Corporation\n and accounting records of ServeMinnesota and its subgrantees. The basis of accounting used\n in the preparation of these reports differs from accounting principles generally accepted in\n the United States of America as discussed below.\n\n Equipment\n\n No equipment was purchased and claimed under Federal or match share of costs for the\n period within our audit scope.\n\n Inventory\n\n Minor materials and supplies are charged to expense during the period of purchase.\n\n\n\n\n 8\n\x0c EXHIBIT A\n Schedule of Award and Claimed Costs \xe2\x80\x93 AmeriCorps Grants\n 03ACHMN001, 06ACHMN001 and 04AFHMN001\n April 1, 2005 through March 31, 2007\n\n Questioned Questioned Questioned\n Claimed Federal Match Education\nSubgrantees Costs Costs Costs Awards Reference\n\n 03ACHMN001 and 06ACHMN001 -\n Competitive\nAdmission Possible * $ 625,274 $ - $ 28,806 $ - Schedule A-6\nDuluth Area Family YMCA * 375,036 - - -\nFaribault Public Schools 1,506,677 - - -\nMinneapolis Public Schools 728,955 - - -\nMinnesota Literacy Council * 379,456 1,777 7,299 - Schedule A-2\nCommonBond Communities * 258,119 25 - - Schedule A-3\nNeighborhood House 425,446 - - -\nRed Lake Band of Chippewa Indians* 536,006 3,246 - 9,450 Schedule A-4\nRise, Inc 670,333 - - -\nSt. Paul Neighborhood Network * 603,609 39,743 65,910 - Schedule A-5\nSt Cloud State University 356,172 - - -\nTwin Cities Habitat for Humanity 520,051 - - -\nSouthern Minnesota Initiative Foundation 163,270 - - -\n Sub-total $ 7,148,404 $ 44,791 $ 102,015 $ 9,450\n\n 04AFHMN001 \xe2\x80\x93 Formula\nMinneapolis Public Schools $ 150,362 $ - $ - $ -\nMinnesota Literacy Council * 710,764 6,293 1,339 - Schedule A-2\nSt. Cloud State University 99,607 - - -\nTwin Cities Habitat for Humanity 227,853 - - -\nDuluth Area Family YMCA * 445,439 411 1,294 1,000 Schedule A-1\nSouthern Minnesota Initiative Foundation 360,570 - - -\nWorthington ISD 518 285,236 - - -\nSt. Croix River Education District 232,364 - - -\nCity of Saint Paul 68,794 - - -\nNeighborhood House 164,295 - - -\n Sub-total $ 2,745,284 $ 6,704 $ 2,633 $ 1,000\n\n Subgrantee Total $ 9,893,688 $ 51,495 $ 104,648 $ 10,450\n\n * Subgrantee selected for application of agreed-upon procedures.\n\n\n\n\n 9\n\x0c Schedule A-1\n Page 1 of 1\n\n Schedule of Award and Claimed Costs\n Duluth Area Family YMCA (YMCA)\n\n April 1, 2005 through March 31, 2007\n\n Reference\n\nApproved Budget (Federal Funds)\n 04AFHMN0010015 $ 594,537 Note 1\n 06ACHMN0010003 629,999 Note 1\n Total Approved Budget (Federal Funds): $1,244,536 Note 1\n\nClaimed Federal Costs\n 04AFHMN0010015 $ 445,439 Note 2\n 06ACHMN0010003 375,036 Note 2\n Total Claimed Federal Costs: $ 820,475 Note 2\n\nQuestioned Federal Costs:\n 04AFHMN0010015 - Unsupported Costs $ 411 Note 3\n\nQuestioned Education Awards:\n 04AFHMN0010015 - Insufficient Member Hours $ 1,000 Note 4\n\nQuestioned Match Costs:\n 04AFHMN0010015 - Credits Not Applied $ 1,294 Note 5\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to the YMCA\n according to subgrantee agreements.\n\n2. Claimed Federal costs represent YMCA\xe2\x80\x99s reported expenditures for the period April 1,\n 2005, through March 31, 2007.\n\n3. Federal share costs claimed of $411 were unsupported due to clerical errors (see\n Finding 1).\n\n4. One applicant recorded 11 AmeriCorps service hours prior to signing a member contract.\n As a result, the minimum service hour requirement was not satisfied, and we questioned\n the related $1,000 education award (see Finding 4).\n\n5. Credits of $1,294 for match costs claimed were not applied (see Finding 1).\n\n\n\n 10\n\x0c Schedule A-2\n Page 1 of 2\n\n Schedule of Award and Claimed Costs\n Minnesota Literacy Council (MLC)\n\n April 1, 2005 through March 31, 2007\n\n Reference\n\nApproved Budget (Federal Funds)\n 03ACHMN0010009 $ 624,498 Note 1\n 04AFHMN0010005 328,601 Note 1\n 04AFHMN0010012 383,031 Note 1\n 04AFHMN0010016 920,399 Note 1\n Total Approved Budget (Federal Funds): $2,256,529 Note 1\n\nClaimed Federal Costs\n 03ACHMN0010009 $ 379,456 Note 2\n 04AFHMN0010005 20,577 Note 2\n 04AFHMN0010012 270,019 Note 2\n 04AFHMN0010016 420,168 Note 2\n Total Claimed Federal Costs: $1,090,220 Note 2\n\nQuestioned Federal Costs:\n 03ACHMN0010009 - Costs Claimed to Wrong Grant $ 1,600 Note 3\n 04AFHMN0010012 - Costs Claimed to Wrong Grant (1,600) Note 3\n 04AFHMN0010012 - Duplicate Living Allowances 417 Note 4\n 03ACHMN0010009 - Improper Allocation Method 177 Note 5\n 04AFHMN0010016 - Improper Allocation Method 7,476 Note 5\n Total Questioned Federal Costs: $ 8,070\n\nQuestioned Match Costs:\n 03ACHMN0010009 - Costs Claimed to Wrong Grant $ 282 Note 3\n 04AFHMN0010012 - Costs Claimed to Wrong Grant (282) Note 3\n 04AFHMN0010012 - Duplicate Living Allowances 73 Note 4\n 03ACHMN0010009 - Unsupported Living Allowances 6,100 Note 6\n 04AFHMN0010016 - Insufficient support for In-Kind 1,548 Note 7\n 03ACHMN0010009 - Insufficient support for In-Kind 917 Note 7\n Total Questioned Match Costs: $ 8,638\n\n\n\n\n 11\n\x0c Schedule A-2\n Page 2 of 2\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to MLC\n according to subgrantee agreements.\n\n2. Claimed costs represent MLC\xe2\x80\x99s reported Federal expenditures for the period April 1,\n 2005, through March 31, 2007.\n\n3. Living Allowance and related FICA costs incurred by various members totaled $1,600\n Federal share and $282 match under the formula grant but were improperly claimed\n under the competitive grant. As a result, the living allowance and related FICA costs for\n the competitive grant were overstated and the formula grant was correspondingly\n understated (see Finding 1).\n\n4. A duplicate charge was made in error because a replacement check was issued to a\n member who had lost the original living allowance check. As a result, we questioned\n $417 Federal share and $73 match for living allowances and related benefits (see Finding\n 1).\n\n5. The non-salary/benefit-related common costs were allocated based on budgeted\n percentages. This method did not equitably distribute benefit costs. As a result, the\n subgrantee overstated the claimed costs on the competitive grant by $177 and on the\n formula grant by $7,476 (see Finding 1).\n\n6. The subgrantee claimed $6,100 in excess of members\xe2\x80\x99 living allowances match due to a\n posting error (see Finding 1).\n\n7. In-kind supplies and space costs were claimed as match, but the supporting\n documentation did not include the basis of how the values for the match were\n determined. We questioned $917 under the competitive grant and $1,548 under the\n formula grant (see Finding 1).\n\n\n\n\n 12\n\x0c Schedule A-3\n Page 1 of 1\n\n Schedule of Award and Claimed Costs\n CommonBond Communities (CBC)\n\n 03ACHMN0010010\n September 1, 2006 through March 31, 2007\n\n Reference\n\nApproved Budget (Federal Funds) $ 503,623 Note 1\n\nClaimed Federal Costs $ 258,119 Note 2\n\nQuestioned Federal Costs:\n Unallowable costs claimed $ 25 Note 3\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to CBC\n according to subgrantee agreements.\n\n2. Claimed Federal costs represent CBC\xe2\x80\x99s reported expenditures for the period September 1,\n 2006, through March 31, 2007.\n\n3. The subgrantee included $25 in fines for parking violations as part of its claimed Federal\n share of expenditures (see Finding 2).\n\n\n\n\n 13\n\x0c Schedule A-4\n Page 1 of 1\n\n Schedule of Award and Claimed Costs\n Red Lake Band of Chippewa Indians (Red Lake)\n\n 03ACHMN0010008\n April 1, 2005 through March 31, 2007\n\n\n Reference\n\nApproved Budget (Federal Funds) $ 944,986 Note 1\n\nClaimed Federal Costs $ 536,006 Note 2\n\nQuestioned Federal Costs:\n Not Approved in Budget: $ 3,246 Note 3\n\nQuestioned Education Awards: $ 9,450 Note 4\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to Red Lake\n according to subgrantee agreements.\n\n2. Claimed costs represent Red Lake\xe2\x80\x99s reported Federal expenditures for the period April 1,\n 2005, through March 31, 2007.\n\n3. Celebration costs of $3,246 were claimed to promote AmeriCorps members, but these\n costs were not included in the approved budget and are, therefore, unallowable (see\n Finding 5).\n\n4. Three members\xe2\x80\x99 timesheets did not have sufficient hours to meet the minimum\n requirement for an education award. As a result, we questioned education awards of\n $9,450 (see Finding 4).\n\n\n\n\n 14\n\x0c Schedule A-5\n Page 1 of 1\n Schedule of Award and Claimed Costs\n St. Paul Neighborhood Network (SPNN)\n\n 03ACHMN0010007\n April 1, 2005 through March 31, 2007\n Reference\n\nApproved Budget (Federal Funds) $ 943,765 Note 1\n\nClaimed Federal Costs $ 603,609 Note 2\n\nQuestioned Federal Costs:\n Not Approved in Budget $ 16,665 Note 3\n Unsupported Costs 8,365 Note 4\n Unsupported Living Allowance 14,713 Note 5\n Totaled Questioned Federal Costs: $ 39,743\n\nQuestioned Match Costs:\n Not Approved in Budget $ 22,515 Note 3\n Unsupported Costs 34,899 Note 4\n Unsupported Living Allowance 2,596 Note 5\n Claimed to the Wrong Grant 5,900 Note 6\n Totaled Questioned Match Costs: $ 65,910\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to SPNN\n according to subgrantee agreements.\n\n2. Claimed costs represent SPNN\xe2\x80\x99s reported Federal expenditures for the period April 1,\n 2005, through March 31, 2007.\n\n3. The subgrantee claimed costs of $16,665 Federal share and $22,515 match for contractual\n and consultant services, which were not included in the approved budget (see Finding 5).\n\n4. Our reconciliation of SPNN\xe2\x80\x99s costs claimed and its accounting records found a difference\n of $8,365 Federal share and $34,899 match (see Finding 1).\n\n5. Our reconciliation of living allowances claimed and accounting records found a\n difference of $14,713 Federal share and $2,596 match (see Finding 1).\n\n6. SPNN claimed $5,900 of match under the competitive grant; however, these expenses\n were for services provided to the subgrantee\xe2\x80\x99s CTC VISTA Project (see Finding 1).\n\n\n\n 15\n\x0c Schedule A-6\n Page 1 of 1\n Schedule of Award and Claimed Costs\n Admission Possible (AP)\n\n April 1, 2005 through March 31, 2007\n\n Reference\n\nApproved Budget (Federal Funds)\n 03ACHMN0010005 $ 529,189 Note 1\n 06ACHMN0010002 554,397 Note 1\n Total Approved Budget (Federal Funds): $1,083,586 Note 1\n\nClaimed Federal Costs\n 03ACHMN0010005 $ 327,694 Note 2\n 06ACHMN0010002 297,580 Note 2\n Total Claimed Federal Costs: $ 625,274 Note 2\n\nQuestioned Match Costs (03ACHMN0010005):\n Unsupported Costs $ 14,064 Note 3\n Unsupported Living Allowances 6,167 Note 4\n Credits Not Applied 3,116 Note 5\n Unallowable Costs 5,459 Note 6\n Totaled Questioned Match Costs: $ 28,806\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to AP\n according to subgrantee agreements.\n\n2. Claimed costs represent AP\xe2\x80\x99s reported Federal expenditures for the period April 1, 2005,\n through March 31, 2007.\n\n3. Reconciliation between match costs claimed and the subgrantee\xe2\x80\x99s accounting records\n found $14,064 of unsupported match costs (see Finding 1).\n\n4. A comparison of AP\xe2\x80\x99s accounting records and its payroll records found a $6,167\n difference between the living allowance claimed as match costs and the amount in the\n books and records (see Finding 1).\n\n5. Our match testing found $3,116 of credits not applied (see Finding 1).\n\n6. AP claimed $5,459 of entertainment and fundraising costs as match expense (see\n Finding 2).\n\n\n\n 16\n\x0c Exhibit B\n Page 1 of 1\n\n Schedule of Award and Claimed Costs\n Administrative Grant\n\n 06CAHMN001\n January 1, 2006 through June 30, 2007\n\n Reference\n\nApproved Budget (Federal Funds) $ 494,949 Note 1\n\nClaimed Federal Costs $ 376,443 Note 2\n\nQuestioned Costs:\n Lobbying Costs $ 1,049 Note 3\n Recognition Awards 57 Note 4\n Totaled Questioned Costs: $ 1,106\n\n\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to\n ServeMinnesota under the Administrative grants according to grantee agreements.\n\n2. Claimed costs represent ServeMinnesota\xe2\x80\x99s reported Federal expenditures for the period\n January 1, 2006, through June 30, 2007.\n\n3. ServeMinnesota claimed $1,049 of lobbying costs as Federal share (see Finding 2).\n\n4. ServeMinnesota allocated and claimed $57 for recognition awards, in the form of gift\n cards, for individuals who donated professional services (i.e., peer reviewers) as Federal\n share (see Finding 2).\n\n\n\n\n 17\n\x0c Exhibit C\n Page 1 of 1\n\n Schedule of Award and Claimed Costs\n PDAT Grant\n\n 06PTHMN001\n January 1, 2006 through June 30, 2007\n\n Reference\n\nApproved Budget (Federal Funds) $ 311,500 Note 1\n\nClaimed Federal Costs $ 225,597 Note 2\n\nQuestioned Costs:\n Lobbying Costs $ 2,088 Note 3\n Recognition Awards 558 Note 4\n Totaled Questioned Costs: $ 2,646\n\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to\n ServeMinnesota under the PDAT grants according to grantee agreements.\n\n2. Claimed costs represent ServeMinnesota\xe2\x80\x99s reported Federal expenditures for the period\n January 1, 2006, through June 30, 2007.\n\n3. ServeMinnesota claimed $2,088 of lobbying costs as Federal share (see Finding 2).\n\n4. ServeMinnesota allocated and claimed $558 for recognition awards, in the form of gift\n cards, for individuals who donated professional services (i.e., peer reviewers) as Federal\n share (see Finding 2).\n\n\n\n\n 18\n\x0c Exhibit D\n Page 1 of 1\n\n Schedule of Award and Claimed Costs\n Disability Grant\n\n 06CDHMN001\n January 1, 2006 through June 30, 2007\n\n Reference\n\nApproved Budget (Federal Funds) $ 326,410 Note 1\n\nClaimed Federal Costs $ 227,768 Note 2\n\nQuestioned Costs:\n Lobbying Costs $ 1,161 Note 3\n Recognition Awards 439 Note 4\n Totaled Questioned Costs: $ 1,600\n\n\n\nNotes\n\n1. The amount shown above as Approved Budget represents the total funding to\n ServeMinnesota under the Disability grants according to grantee agreements.\n\n2. Claimed costs represent ServeMinnesota\xe2\x80\x99s reported Federal expenditures for the period\n January 1, 2006, through June 30, 2007.\n\n3. ServeMinnesota claimed $1,161 of lobbying costs as Federal share (see Finding 2).\n\n4. ServeMinnesota allocated and claimed $439 for recognition awards, in the form of gift\n cards, for individuals who donated professional services (i.e., peer reviewers) as Federal\n share (see Finding 2).\n\n\n\n\n 19\n\x0c Results - Compliance and Internal Control\n\nThe results of our agreed-upon procedures also revealed instances of non-compliance with\ngrant provisions, regulations, or OMB requirements, as shown below:\n\n \xe2\x80\xa2 Lack of controls or controls not implemented over reporting and recording of Federal\n and match costs;\n\n \xe2\x80\xa2 Costs questioned for allowability;\n\n \xe2\x80\xa2 Late and missing member forms, progress reports, expense reports, and FSRs;\n\n \xe2\x80\xa2 Lack of adequate procedures to ensure that members signed their contracts before\n starting service and that the subgrantees entered enrollment information into WBRS\n in a timely manner; and\n\n \xe2\x80\xa2 Costs claimed were not in the approved budget.\n\n\nFinding 1. Lack of Controls or Controls Not Implemented Over Reporting and\n Recording of Federal and Match Costs\n\nOur agreed-upon procedures found inadequate controls over reporting and recording of\nServeMinnesota\xe2\x80\x99s and subgrantees\xe2\x80\x99 Federal and match costs, or established controls that\nwere not fully implemented.\n\nFederal and match costs reported lack sufficient supporting documentation.\n\nAP\n\nReconciliation between match costs claimed and AP\xe2\x80\x99s accounting records found $14,064 of\nunsupported match costs. In addition, a comparison of AP\xe2\x80\x99s accounting records and its\npayroll records found a $6,167 difference between the living allowance claimed as match\ncosts and the amount in the books and records. The condition is due to a combination of\nfactors:\n\n \xe2\x80\xa2 Inadequate reconciliation of claimed costs to the books;\n\n \xe2\x80\xa2 Lack of a policy and operating procedures and clearly defined responsibilities;\n\n \xe2\x80\xa2 Clerical errors due to inexperienced staff with limited accounting skills, lack of\n adequate supervision, and an inadequate supervisory review process;\n\n \xe2\x80\xa2 Limitations of the subgrantee\xe2\x80\x99s accounting systems to separate certain expense\n accounts; and\n\n \xe2\x80\xa2 Costs claimed based on approximations that were not later adjusted to actual costs.\n\n 20\n\x0cYMCA\n\nOur testing of YMCA found $411 of Federal costs claimed was unsupported. The\nsubgrantee claimed $25 twice for the costs of the same member\xe2\x80\x99s training and also overstated\npersonnel expenses by $186 and living allowances by $200 due to clerical errors.\n\nThe subgrantee made errors in aggregating claimed costs and did not have a documented\nprocess for reconciling reported costs to actual expenditures and reviewing claims before\nthey are submitted. Instead, the subgrantee relies on an informal review to ensure that\nreported costs are accurate.\n\nMLC\n\nOur testing of MLC found Federal and match costs claimed were unsupported. The\nsubgrantee:\n\n \xe2\x80\xa2 Claimed $6,100 in excess of members' living allowance match due to a posting error.\n A temporary accountant erroneously posted the amount to the living allowance\n account of the AmeriCorps grant and the mistake was not detected as part of the\n review process.\n\n \xe2\x80\xa2 Charged a member\xe2\x80\x99s FICA costs of $567 as Federal share to Program Year (PY)\n 2005-2006, which were applicable to Program Year 2006-2007. These costs include\n $250 for the AmeriCorps Formula Grant No. 04AFHMN001 and $317 for the\n AmeriCorps Competitive Grant No. 03ACHMN001. During PY 2005-2006, the\n subgrantee\xe2\x80\x99s payroll system was not set up to identify living allowance payments by\n grant. The program representatives manually tracked living allowances on a\n spreadsheet but made errors, which resulted in charging $567 to the wrong fiscal\n period.\n\n \xe2\x80\xa2 Claimed in-kind supplies and space costs as match but the supporting documentation\n did not include the basis of how the values for the match were determined. We\n questioned $917 under the competitive grant and $1,548 under the formula grant.\n The subgrantee did not have established policies to ensure reported in-kind donations\n were valued appropriately.\n\nSPNN\n\nOur testing of SPNN found Federal and match costs claimed were unsupported, as follows:\n\n \xe2\x80\xa2 There was a $8,365 Federal share and a $34,899 match difference between the\n amounts claimed and the accounting records as detailed in the following schedule:\n\n\n\n\n 21\n\x0c PY 2004-2005 PY 2005-2006 PY 2006-2007 Total\n Federal Share $ 2,200 $ 4,199 $ 1,966 $ 8,365\n Match Share 9,100 13,056 12,743 34,899\n Total $ 11,300 $ 17,255 $ 14,709 $ 43,264\n\n SPNN did not have policies or operating procedures to adequately reconcile costs to its\n general ledger.\n\n \xe2\x80\xa2 Members\xe2\x80\x99 living allowances and related FICA costs claimed were unsupported by\n SPNN\xe2\x80\x99s payroll records, as follows:\n\n PY 2005-2006 PY 2006-2007 Total\n Federal Share $ 5,117 $ 9,596 $ 14,713\n Match Share 903 1,693 2,596\n Total $ 6,020 $ 11,289 $ 17,309\n\n SPNN did not adequately reconcile its subsidiary ledgers (i.e., payroll registers) to the\n corresponding general ledger balances.\n\nCriteria\n\nAmeriCorps General Provision (2004), C.22.b., Financial Management Provisions, Source\nDocumentation, states:\n\n The grantee must maintain adequate supporting documents for its\n expenditures (Federal and non-Federal) and in-kind contributions made under\n this grant. Costs must be shown in books or records [e.g., a disbursement\n ledger or journal], and must be supported by a source document, such as a\n receipt, travel voucher, invoice, bill, in-kind voucher, or similar document.\n\nAmeriCorps General Provision (2005), V.B.1., Financial Management Standards, states:\n\n The grantee must maintain financial management systems that include\n standard accounting practices, sufficient internal controls, a clear audit trail\n and written cost allocation procedures, as necessary. Financial management\n systems must be capable of distinguishing expenditures attributable to this\n grant from expenditures not attributable to this grant. The systems must be\n able to identify costs by programmatic year and by budget category and to\n differentiate between direct and indirect costs or administrative costs. For\n further details about the grantee's financial management responsibilities, refer\n to OMB Circular A-102 and its implementing regulations (45 C.F.R. \xc2\xa7 2543)\n or A-110 and its implementing regulations (45 C.F.R. \xc2\xa7 2541), as applicable.\n\nThe uniform common rule for grants administration by non-profits, codified in the\nCorporation\xe2\x80\x99s regulations at 45 C.F.R. \xc2\xa7 2543, at subsection 21., Standards for financial\nmanagement systems, states:\n\n 22\n\x0c b. Recipients' financial management systems shall provide for the following:\n\n ....\n\n (6) Written procedures for determining the reasonableness, allocability and\n allowability of costs in accordance with the provisions of the applicable\n Federal cost principles and the terms and conditions of the award.\n\nCosts Claimed to the Wrong Grant\n\nMLC\n\nOur testing of MLC found costs claimed to the wrong grant and inequitable allocations, as\nfollows:\n\n \xe2\x80\xa2 Living allowances for the formula grant were incorrectly claimed under the\n competitive grant due to a calculation error in the tracking spreadsheet. As a result,\n the competitive grant was overstated and the formula grant was understated by the\n following amount:\n\n Type of Costs Amount FICA Total Cost\n Federal Share $ 1,486 $ 114 $ 1,600\n Match Share 262 20 282\n Total $ 1,748 $ 134 $ 1,882\n\n \xe2\x80\xa2 The non-salary/benefit related common costs were allocated based on budgeted\n percentages. This method did not equitably distribute benefit costs. As a result,\n MLC overstated the claimed reimbursements on the competitive grant by $177 and on\n the formula grant by $7,476.\n\nSPNN\n\nSPNN claimed $5,900 of match expenses under the competitive grant; however, these\nexpenses were for services provided to the subgrantee\xe2\x80\x99s CTC VISTA Project. SPNN did not\nhave an adequate review process to ensure that costs were charged to the appropriate grant.\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment A.\nGeneral Provisions, Section A.4. Basic Considerations, Allocable Costs, states:\n\n a. A cost is allocable to a particular cost objective, such as a grant, contract,\n project, service, or other activity, in accordance with the relative benefits\n received. A cost is allocable to a Federal award if it is treated consistently\n with other costs incurred for the same purpose in like circumstances and if\n it:\n\n\n\n 23\n\x0c (1) Is incurred specifically for the award.\n (2) Benefits both the award and other work and can be distributed in\n reasonable proportion to the benefits received, or\n (3) Is necessary to the overall operation of the organization, although a direct\n relationship to any particular cost objective cannot be shown.\n\n b. Any cost allocable to a particular award or other cost objective under these\n principles may not be shifted to other Federal awards to overcome funding\n deficiencies, or to avoid restrictions imposed by law or by the terms of the\n award.\n\nCredits not applied\n\nAP\n\nDuring our match testing, we found that the following credits were not applied:\n\n \xe2\x80\xa2 A $745 credit from Southwest State University to transport students to the campus;\n\n \xe2\x80\xa2 A $100 voided check was not credited to match costs; and\n\n \xe2\x80\xa2 The costs of scholarships unrelated to the AmeriCorps Program were recorded as\n match. AP\xe2\x80\x99s original intention was to apply credits to these expenses because they\n were non-AmeriCorps related. However, no credit was applied. As a result, we\n questioned $2,271 of match costs.\n\nAP did not have established procedures for reviewing cleared checks and reducing claimed\namounts when a check was voided. In addition, AP had not established procedures for\ntracking credits and ensuring that any credits received were applied against corresponding\nclaimed costs.\n\nYMCA\n\nDuring our testing of match costs, we found that credits of $1,294 were not applied, as\nfollows:\n\n \xe2\x80\xa2 $536 of member reimbursements for health insurance premiums; and\n\n \xe2\x80\xa2 A $758 credit received from a vendor.\n\nYMCA did not have a process to ensure that credits are applied as off-sets against recorded\nand claimed costs. Instead, YMCA relied on an informal review to ensure that credits are\napplied.\n\n\n\n\n 24\n\x0cMLC\n\nThe subgrantee issued a replacement check to a member who had lost her original living\nallowance check; however, the accountant voided the first check, but inadvertently claimed\nboth the voided amount and the new check. As a result, costs were questioned as follows:\n\n Living\n Allowance FICA Total\n Federal Share $ 387 $ 30 $ 417\n Match Share 68 5 73\n Total $ 455 $ 35 $ 490\n\nCriteria\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment A. General\nProvisions, Section A.5., Basic Considerations, Applicable Credits, states:\n\n The term applicable credit refers to those receipts, or reduction of expenditures\n which operate to offset or reduce expense items that are allocable to awards as\n direct or indirect costs. Typical examples of such transactions are: purchase\n discounts, rebates or allowances, recoveries or indemnities on losses, insurance\n refunds, and adjustments of overpayments or erroneous charges. To the extent\n that such credits accruing or received by the organization relate to allowable cost,\n they shall be credited to the Federal Government either as a cost reduction or cash\n refunds, as appropriate.\n\nRecommendations\n\nWe recommend that the Corporation:\n\n 1.a. Resolve the questioned costs and recoup any disallowed and applicable\n administrative costs; and\n\n 1.b. Ensure that ServeMinnesota trains and monitors its subgrantees in establishing\n controls that specifically address the errors and weaknesses identified above. This\n effort includes developing a record-keeping system such that grant documentation is\n retained and readily accessible; develop policies and procedures to ensure costs\n claimed are properly supported by its accounting records and source documentation;\n design controls to verify the accuracy of costs claimed; design proper allocation\n methodology for costs; and implement procedures requiring appropriate personnel to\n review FSRs before they are submitted. The reviews should include tracing reported\n amounts on the FSRs to supporting documentation and verifying the accuracy of the\n data through appropriately designed analysis.\n\n\n\n\n 25\n\x0cServeMinnesota\xe2\x80\x99s Response\n\nServeMinnesota stated that its subgrantees agree with this finding and have taken corrective\nactions. It also stated that some subgrantees had more match costs than required or had\nmatch costs not previously reported that could be substituted for match costs the auditors\nquestioned. ServeMinnesota is reviewing these match costs.\n\n\nAuditor\xe2\x80\x99s Comment\n\nServeMinnesota indicated that the subgrantees have taken corrective measures. Additional\nor replacement match provided by the subgrantees should be reviewed to ensure that it is\nreasonable, allowable, and allocable. The Corporation should consider the actions taken but\ndisallow and recoup the questioned costs, plus applicable administrative costs, because\nServeMinnesota stated that the subgrantees agree with the finding.\n\n\nFinding 2. Costs Questioned for Allowability\n\nServeMinnesota\n\nServeMinnesota claimed as Federal share, the costs of gift cards provided to volunteers and\nlobbying costs, as follows:\n\n \xe2\x80\xa2 ServeMinnesota allocated costs, for gift cards with values that ranging from $20 to\n $25, for individuals who donated professional services (i.e., peer reviewers). We\n questioned these costs, as follows:\n\n Grant Grant # Federal Share\n Administrative 06CAHMN001 $ 57\n Disability 06CDHMN001 439\n Progressive Development and Training (PDAT) 06PTHMN001 558\n Total $ 1054\n\n ServeMinnesota misinterpreted such costs to be \xe2\x80\x9cvolunteer recognition\xe2\x80\x9d costs\n consistent with the 45 C.F.R. \xc2\xa7 2520.30, What capacity-building activities may\n AmeriCorps members perform? This section provides authorization for AmeriCorps\n members to perform capacity-building activities, such as promoting the retention of\n volunteers by, for example, \xe2\x80\x9cplanning a recognition event\xe2\x80\x9d for volunteers. It does not\n authorize monetary awards or gifts for volunteers.\n\n We found no legal authorization to use Federal funds to pay for volunteer services\n furnished to an organization or to pay for associated recognition costs such as gift\n cards. Accordingly, such costs are not allowable as Federal share or match.\n\n\n\n\n 26\n\x0c \xe2\x80\xa2 ServeMinnesota allocated lobbying costs of $4,298 as Federal share to the\n Administrative grant, Disability grant, and PDAT grant. These costs were for a\n consultant\xe2\x80\x99s fees and for catering services for legislative liaison activities. These\n activities included gathering information regarding legislation and analyzing the\n effect of legislation as a precursor to potential lobbying activities. ServeMinnesota\n believed that information gathering of this nature (e.g., potential legislation, candidate\n positions, etc.) was more educational in nature and was allowable if no direct\n lobbying activity was involved. The questioned costs by grant are:\n\n\n Grant Grant # Questioned Cost\n Administrative 06CAHMN001 $ 1,049\n Disability 06CDHMN001 $ 1,161\n PDAT 06PTHMN001 $ 2,088\n Total $ 4,298\n\nAP\n\nAP claimed $5,459 of entertainment and fundraising costs as match expense, as follows:\n\n \xe2\x80\xa2 Invoices for mailing invitations and providing transportation to a corporate sponsored\n trip to a Minnesota Twins baseball game totaling $4,198 were included as match\n costs; and\n\n \xe2\x80\xa2 Invoices for postage to mail fundraising letters totaling $1,261 were included as\n match costs.\n\nThe subgrantee has not developed and implemented review procedures to ensure that\nunallowable types of costs are identified and excluded from Federal share and/or claimed\nmatch costs.\n\nCBC\n\nCBC claimed parking fines of $25. CBC personnel did not identify this transaction as\nunallowable as part of its standard cost review process.\n\nCriteria\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment B., Selected\nItems of Cost, Section 12.b.1. Donations and Contributions, Donated Services Received,\nstates:\n\n Donated or volunteer services may be furnished to an organization by\n professional and technical personnel, consultants, and other skilled and\n unskilled labor. The value of these services is not reimbursable either as a\n direct or indirect cost. However, the value of donated services may be used to\n\n 27\n\x0c meet cost sharing or matching requirements in accordance with the Common\n Rule.\n\nOMB Circular A-122, Attachment B, Cost Principles for Non-Profit Organizations, Selected\nItems of Cost, Section 25(a)(5) Lobbying, states:\n\n Legislative liaison activities, including attendance at legislative sessions or\n committee hearings, gathering information regarding legislation, and\n analyzing the effect of legislation, when such activities are carried on in\n support of or in knowing preparation for an effort to engage in unallowable\n lobbying.\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment B., Selected\nItems of Cost, Section 14. Entertainment Costs, states that \xe2\x80\x9c[c]osts of entertainment,\nincluding amusement, diversion, and social activities and any costs directly associated with\nsuch costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation,\nand gratuities) are unallowable.\xe2\x80\x9d\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment B., Selected\nItems of Cost, Section 17. Fund Raising and Investment Management Costs, states that\n\xe2\x80\x9c[c]osts of organized fund raising, including financial campaigns, endowment drives,\nsolicitation of gifts and bequests, and similar expenses incurred solely to raise capital or\nobtain contributions are unallowable.\xe2\x80\x9d\n\nOMB Circular A-122, Cost Principles for Non-Profit Organizations, Attachment B., Selected\nItems of Cost, Section 16. Fines and Penalties, states that \xe2\x80\x9c[c]osts of fines and penalties\nresulting from violations of, or failure of the organization to comply with Federal, State, and\nlocal laws and regulations are unallowable except when incurred as a result of compliance\nwith specific provisions of an award or instructions in writing from the awarding agency.\xe2\x80\x9d\n\nRecommendations\n\nWe recommend that the Corporation:\n\n 2.a. Disallow and recoup the questioned costs and applicable administrative costs;\n\n 2.b. Train ServeMinnesota and its subgrantees regarding applicable cost principles and\n grant regulations; and\n\n 2.c. Instruct ServeMinnesota to develop and implement procedures and controls to\n ensure that claimed costs are allowable and allocable in accordance with applicable\n costs principles, including thorough reviews of costs claimed on FSRs to supporting\n documentation to determine allowability. Once implemented, review costs claimed\n to ensure that the procedures are effective.\n\n\n\n\n 28\n\x0cServeMinnesota\xe2\x80\x99s Response\n\nServeMinnesota stated that it believed it is important to provide recognition to volunteers\nwilling to give significant time to ensure the success of AmeriCorps programming in\nMinnesota. Consistent with this belief, ServeMinnesota provided $20 - $25 dollar gift cards\nto individuals who served about 16 hours as peer reviewers.\n\nIn addition, ServeMinnesota continues to believe the costs questioned as lobbying activities\nwere educational and not lobbying. However, ServeMinnesota does agree that the $200.00\nfor catering services should not have been charged to Federal funds and is in agreement that\nthis amount should be returned to CNCS.\n\nServeMinnesota believes the issue of allowability of expenses was not due to lack of training\nor understanding of cost principles but rather differences in interpretation. ServeMinnesota\nindicated that it does have procedures and controls and the audit has provided clarification on\nitems where there is room for varying interpretations of cost principles.\n\nServeMinnesota indicated that AP has taken steps to increase its staff capacity in both grant\nmanagement and grant accounting. Further, the subgrantee has made financial system\nenhancements that make class accounting easier to understand and apply. AP continues to\nplace emphasis on ensuring that staff involved in grant management and accounting have a\ncomprehensive understanding of the governing rules and its internal systems. It has\ndeveloped systems whereby the assignment of an expense is reviewed by at least two staff\nmembers with appropriate skill and understanding to ensure compliance with the governing\nrules and regulations. It also indicated that AP has more match than required and, after\nremoving the questioned match costs, it more than meets minimum match requirements.\n\nFor CBC, ServeMinnesota indicated that the $25 fine was removed in program year 2006-\n2007 and any similar expenses will not be claimed in the future.\n\nAuditor\xe2\x80\x99s Comment\n\nServeMinnesota agreed that it did award gift cards to peer reviewers, but it did not address\nthe lack of legal authorization to use Federal funds to pay for volunteer services furnished to\nan organization or to pay for associated recognition costs such as gift cards. It did not\ndisclose the action it planned to take.\n\nThe Corporation should consider the actions taken by ServeMinnesota for its subgrantees and\nshould follow up to ensure that ServeMinnesota\xe2\x80\x99s planned actions are implemented and\neffective. ServeMinnesota did not propose any specific planned actions to prevent CBC from\nclaiming unallowable expenses in the future.\n\nIn addition, ServeMinnesota allocated costs for consultant\xe2\x80\x99s fees which included such\nactivities as gathering information regarding legislation and analyzing the effect of\nlegislation as a precursor to potential lobbying activities. These activities are lobbying costs\nas specified in OMB Circular A-122, which we quote in the finding. ServeMinnesota\n\n 29\n\x0cbelieves the allowability of expenses was not due to lack of training or understanding of cost\nprinciples, but rather differences in interpretation. However, it provides no refuting\ninformation that would cause us to believe the effort was not lobbying. The Corporation\nshould take the recommended actions.\n\n\nFinding 3. Late and Missing Member Forms, Progress Reports, Expense Reports, and\n FSRs\n\nLate Submission. Our sample found that the subgrantees did not submit required reports\nand forms by the dates due, as shown in the table below.\n\nSubgrantees Description of Non-Compliance\nAP \xe2\x80\xa2 1 of 6 required progress reports was submitted\n late.\n \xe2\x80\xa2 1 of 3 required Final Closeout Forms was\n submitted late.\n\nCBC \xe2\x80\xa2 1 of 2 required FSRs was submitted late.\n \xe2\x80\xa2 1 of 2 required ServeMinnesota Expense Report\n Forms (SERF) was submitted late.\n\nYMCA \xe2\x80\xa2 4 of 37 enrollment forms were submitted late.\n \xe2\x80\xa2 5 of 37 exit forms sampled were submitted late.\n\nMLC \xe2\x80\xa2 4 of 21 enrollment forms under the Competitive\n grant were submitted late.\n \xe2\x80\xa2 6 of 26 enrollment forms and 1 of 26 exit forms\n under the Formula grant were submitted late.\n \xe2\x80\xa2 5 of 8 FSRs and 1 of 9 progress reports under the\n Competitive grant were submitted late.\n \xe2\x80\xa2 5 of 8 FSRs and 1 of 9 progress reports under the\n Formula grant were submitted late.\n\nRed Lake \xe2\x80\xa2 1 of 7 required progress reports was submitted\n late.\n \xe2\x80\xa2 2 of 8 required FSRs were submitted late.\n\nSPNN \xe2\x80\xa2 2 of 8 required FSRs were submitted late.\n \xe2\x80\xa2 1 of 8 required SERFs was submitted late.\n \xe2\x80\xa2 1 of 3 required Final Closeout Forms was\n submitted late.\n \xe2\x80\xa2 5 of 21 enrollment forms and 4 of 21 exit forms\n were submitted late.\n\n\n\n\n 30\n\x0cAP representatives indicated that the late progress report may have been due to a technology\nissue which prevented them from meeting the due date. AP also indicated that a staff\nmember forgot to file the final closeout form.\n\nCBC experienced delays in submitting its reports at the beginning of the program because it\nhad not assigned responsibilities for approving the reports.\n\nYMCA\xe2\x80\x99s existing administrative oversight controls did not operate effectively to ensure that\nthe forms were filed in a timely manner.\n\nMLC\xe2\x80\x99s enrollment forms were submitted late because of a delay in approval of slot\nconversions. For late submission of reports, there may have been a verbal extension granted\nby ServeMinnesota. However, this could not be verified because the involved parties are no\nlonger employed by ServeMinnesota or MLC.\n\nRed Lake representatives were unable to identify any specific reason for filing reports late\nbut stated that the responsible individual was on medical leave.\n\nSPNN lacked oversight controls and monitoring procedures to ensure that FSRs and SERFs\nwere submitted on time. In addition, SPNN experienced a delay in receiving instructions\nfrom ServeMinnesota on how to report expenditures, and reports were not filed until that\nissue was clarified. Finally, SPNN submitted a final closeout form late because of a change\nof program officers.\n\nThe lack of compliance by subgrantees demonstrate an internal control weakness at\nServeMinnesota, which needs to improve its monitoring to detect and correct instances that\nits subgrantees submit required reports late.\n\nBy submitting documentation late, ServeMinnesota may not receive information related to\nsubgrantee activity in a timely manner. Accordingly, this may reduce ServeMinnesota\xe2\x80\x99s\nability to identify potential issues in a timely manner and may also prevent ServeMinnesota\nfrom accurately reporting program and expenditure information to the Corporation in a\ntimely manner.\n\nCriteria\n\nThe AmeriCorps Special Provisions (2004), Section B.16. Reporting Requirements, states in\npart:\n\n The Corporation expects each Grantee to set its own Subgrantee reporting\n requirements. Grantees are responsible for monitoring Subgrantee activities\n and training needs, tracking progress toward objectives, and identifying\n challenges. Subgrantees must adhere to the reporting requirements outlined\n and communicated by its Grantee for the program year.\n\n\n\n\n 31\n\x0cThe AmeriCorps Grant Agreement, the subgrant, for PY 2004-2005 between ServeMinnesota\nand its subgrantees, \xc2\xa7 IV (4) states:\n\n In the performance of this project, the GRANTEE shall:\n\n Submit all required fiscal and program reports according to the following\n deadline:\n\n a. A Financial Status Report (FSR) must be completed and approved in the\n Web-Based Reporting System (WBRS) each quarter according to the\n following schedule:\n\n I. Quarter I (08/1/04-12/31/2004) due on January 15, 2005\n II. Quarter II (01/01/2005-03/31/2005) due on April 15, 2005\n III. Quarter III (04/01/2005-06/30/2005) due on July 15, 2005\n IV. Quarter IV (07/01/2005-08/31/05) due on October 15, 2005\n\n b. A ServeMinnesota Expense Report Form (SERF) must be prepared and\n submitted to ServeMinnesota according to the aforementioned schedule.\n\nThe AmeriCorps Grant Agreement, the subgrant, for PY 2005-2006 between ServeMinnesota\nand its subgrantees, \xc2\xa7 IV (4) states:\n\n In the performance of this project, the GRANTEE shall:\n\n Submit all required fiscal and program reports according to the following\n deadline:\n\n a. A Financial Status Report (FSR) must be completed and approved in the\n Web-Based Reporting System (WBRS) each quarter according to the\n following schedule:\n\n I. Quarter I (September 1 \xe2\x80\x93 December 31) due on January 13, 2006\n II. Quarter II (January 1 \xe2\x80\x93 March 31) due on April 14, 2006\n III. Quarter III (April 1 \xe2\x80\x93 June 30) due on July 14, 2006\n IV. Quarter IV (July 1 \xe2\x80\x93 August 31) due on October 13, 2006\n\n b. A ServeMinnesota Expense Report Form (SERF) must be prepared and\n submitted to ServeMinnesota according to the aforementioned schedule.\n\n c. The GRANTEE must close out this grant according to appropriate Office\n Management and Budget (OMB) Circular After-the-Grant Policies and Serve\n Minnesota direction. Final Closeout Forms are due on October 14, 2005\n (2006).\n\n\n\n\n 32\n\x0c d. A Quarter II Progress Report must be completed and approved in WBRS by\n April 14, 2006 for the period, 01/01/2006 \xe2\x80\x93 03/31/2006.\n\n e. A Quarter I Progress Report must be completed and approved in WBRS by\n January 13, 2006 for the period, 9/1/05 \xe2\x80\x93 12/31/05.\n\nThe AmeriCorps Grant Agreement, the subgrant, for PY 2006-2007 between ServeMinnesota\nand its subgrantees, \xc2\xa7 IV (4) states:\n\n In the performance of this project, the GRANTEE shall:\n\n Submit all required fiscal and program reports according to the following\n deadline:\n\n c. A Financial Status Report (FSR) must be completed and approved in the\n Web-Based Reporting System (WBRS) each quarter according to the\n following schedule:\n\n I. Quarter I (September 1 \xe2\x80\x93 December 31) due on January 12, 2007\n II. Quarter II (January 1 \xe2\x80\x93 March 31) due on April 13, 2007\n III. Quarter III (April 1 \xe2\x80\x93 June 30) due on July 13, 2007\n IV. Quarter IV (July 1 \xe2\x80\x93 August 31) due on October 12, 2007\n\n d. A ServeMinnesota Expense Report Form (SERF) must be prepared and\n submitted to ServeMinnesota according to the aforementioned schedule.\n\nThe 2004 AmeriCorps Special Provisions, Section B.16.b. Reporting Requirements,\nMember-Related Forms; and the 2005 and 2006 AmeriCorps Provisions, Section IV.N.2.\nAmeriCorps Member-Related Forms states:\n\n The Grantee is required to submit the following documents to the National\n Service Trust at the Corporation on forms provided by the Corporation.\n Grantees and Sub-Grantees may use WBRS to submit these forms\n electronically. Programs using WBRS must also maintain hard copies of the\n forms:\n\n i. Enrollment Forms. Enrollment forms must be submitted no later\n than 30 days after a member is enrolled.\n\n ii. Change of Status Forms. Member Change of Status Forms must be\n submitted no later than 30 days after a member\xe2\x80\x99s status is changed. By\n forwarding Member Change of Status Forms to the Corporation, State\n Commissions and Parent Organizations signal their approval of the\n change.\n\n\n\n\n 33\n\x0c iii. Exit/End-of-Term-of-Service Forms. Member Exit/End-of-Term-\n of-Service Forms must be submitted no later than 30 days after a\n member exits the program or finishes his/her term of service.\n\nMissing Member Documentation: We found the following instances of missing member\ndocumentation:\n\n \xe2\x80\xa2 YMCA did not maintain sign-in sheets or other documentation for member\n orientation.\n\n \xe2\x80\xa2 At Red Lake, of the 21 member files we sampled, 4 mid-term evaluations and 1 end-\n of-term evaluation were missing.\n\nYMCA did not have a policy and procedure which required the enrollment councils to\ndocument member orientation. An established procedure to document orientation attendance\nwas not developed and implemented until PY 2006-2007. Without proof of attendance, we\ncould not determine whether individual AmeriCorps members received the required\norientation.\n\nRed Lake did not have a method for tracking completion of the member evaluations. In\naddition, the program manager who was responsible for performing the evaluations was not\naware of the requirement for completing both a mid-term and an end-of-term evaluation for\neach member and performed only one of the two required evaluations for some members.\nWithout documented evaluations, the subgrantee may not be able to determine whether the\nmember has satisfactorily completed assignments; and whether the member has met other\nperformance criteria that were communicated at the beginning of the term of service.\nFinally, the member might not be eligible to perform services for a second term without a\nsatisfactory end-of-term evaluation.\n\nCriteria\n\nThe 2004 AmeriCorps Special Provisions, B.7.c. Training, Supervision and Support,\nTraining and; the 2005 and 2006 AmeriCorps Special Provisions, Section IV.D.3 Training,\nSupervision and Support, state:\n\n The grantee must conduct an orientation for members and comply with any\n pre-service orientation or training required by the Corporation. This\n orientation should be designed to enhance member security and sensitivity to\n the community. Orientation should cover member rights and responsibilities,\n including the Program's code of conduct, prohibited activities (including those\n specified in the regulations), requirements under the Drug-Free Workplace\n Act (41 U.S.C. 701 et seq.), suspension and termination from service,\n grievance procedures, sexual harassment, other non-discrimination issues, and\n other topics as necessary.\n\nAmeriCorps Special Provisions, Section IV.D.6. Training, Supervision and Support, states in\npart:\n 34\n\x0c Performance Reviews. The grantee must conduct and keep a record of at least\n a midterm and end-of-term written evaluation of each member's performance\n for Full and Half-Time members and an end-of-term written evaluation for\n less than Half-time members. The evaluation should focus on such factors as:\n\n a. Whether the member has completed the required number of hours;\n b. Whether the member has satisfactorily completed assignments; and\n c. Whether the member has met other performance criteria that were\n clearly communicated at the beginning of the term of service.\n\nAccording to 45 C.F.R. \xc2\xa7 2522.220(d), Participant performance review, \xe2\x80\x9ca\nparticipant is not eligible for a second or additional term of service without a\nsatisfactory mid-term and final performance evaluation.\xe2\x80\x9d\n\nRecommendations\n\nWe recommend that the Corporation:\n\n 3.a. Verify that ServeMinnesota develops and implements more effective control\n procedures and closely monitors its subgrantees to ensure prompt and complete\n financial and programmatic reporting, as well as member evaluations, in accordance\n with the ServeMinnesota requirement;\n\n 3.b. Instruct ServeMinnesota to follow up with Red Lake to ensure that its members\n received an evaluation.\n\n 3.c. Instruct ServeMinnesota to provide a refresher course for its subgrantees on program\n compliance requirements, including report submissions, documenting member\n orientations, and the important role training and evaluations play in member\n development.\n\nServeMinnesota\xe2\x80\x99s Response\n\nServeMinnesota indicated that all subgrantees understand the reporting requirements and will\ntake appropriate corrective measures to ensure that future reporting remains in compliance.\nServeMinnesota has implemented a new policy regarding timeliness of reporting and meeting\ndeadlines.\n\nServeMinnesota has always provided training for its subgrantees on program compliance and\nmember development at the start of each program year. ServeMinnesota has now\nimplemented an enhanced monitoring system which requires programs to standardize their\noperations. This instrument consists of 14 systems, each tailored to a particular area of\nprogram or grants management. ServeMinnesota staff individually review all 14 systems for\neach subgrantee.\n\n\n\n 35\n\x0cServeMinnesota received from Red Lake copies of two of the four missing member\nevaluations. ServeMinnesota advised Red Lake that half-time members are required to have\ntwo evaluations.\n\nAuditor\xe2\x80\x99s Comment\n\nThe Corporation should consider the actions taken or proposed by ServeMinnesota, as it\ntakes the recommended actions, and should also follow up to ensure those actions are\nimplemented and effective.\n\n\nFinding 4. Lack of Adequate Procedures to Ensure That Members Signed Their\n Contract before Starting Service and that the Subgrantees Entered\n Enrollment Information into WBRS in a Timely Manner\n\nInsufficient Hours: Testing of member files at YMCA found 1 of 37 AmeriCorps members\nin our sample recorded service hours while the individual was an applicant without a signed\ncontract. The member left the original orientation meeting early for personal reasons and did\nnot sign the contract prior to leaving. YMCA did not take appropriate follow-up actions with\nthe member to ensure that the contract was signed prior to recording service hours. The\napplicant recorded 11 service hours before becoming an AmeriCorps member. As a result,\nthe member did not meet the minimum required hours to receive an education award, and we\nquestioned the $1,000 education award.\n\n Hours\n Program Hours per Served As Ed Award\n Member Year WBRS A Member Difference Questioned\n Member A 2004-2005 306.50 295.50 (11) $ 1,000\n\nAt Red Lake, 3 of 21 sampled AmeriCorps member timesheets did not support hours\nreported in WBRS. The condition was due to calculation errors on the timesheets. Red Lake\ndid not have monitoring procedures in place to ensure hours recorded on timesheets and\nentered in WBRS were accurate. As a result, two of the members sampled did not meet the\nminimum requirement for an education award, and we questioned $9,450 of education\nawards, as follows:\n\n Program Hours per Hours Per Ed Award\n Member Year WBRS Timesheets Variance Questioned\n Member A 2004-2005 1,705.90 1,650.50 (55.40) $ 4,725\n Member B 2005-2006 1,723.60 1,673.00 (50.60) 4,725\n Did not Earn\n Member C 2005-2006 291.50 272.25 (19.25) an award\n Total: $ 9,450\n\nMembers Not in WBRS: Three members at MLC, two members at Red Lake, and two\nmembers at SPNN were admitted to the AmeriCorps program but were not entered in\n\n 36\n\x0cWBRS. These members exited the program within 30 days of enrollment and the program\npersonnel responsible for updating WBRS and the member roster did not enter member\ninformation into WBRS as required. Red Lake was unaware that member information\nneeded to be entered into WBRS when members exited the program early. The other two\nsubgrantees did not follow their policies for updating WBRS. Without updating WBRS, the\nCorporation might not be able to rely on the reported program member information included\nin the system. In addition, controls over enrollment can be compromised and the\nsubgrantee\xe2\x80\x99s member retention rate may be overstated and slot refill limitations may be\naffected.\n\nCriteria\n\nPY 2004-2005: the 2004 AmeriCorps Special Provisions, Section B.d.i. Terms of Service,\nstates:\n\n Member Enrollment Procedures. An individual is enrolled as an AmeriCorps\n member when all of the following have occurred:\n\n 1. He or she has a signed member contract;\n 2. The program has verified the individual\xe2\x80\x99s eligibility to serve;\n 3. The individual has begun a term of service; and\n 4. The program has approved the member enrollment form in WBRS.\n\nThe 2004 AmeriCorps General Provisions, Section C.2.ii. Financial Management Provisions,\nAmeriCorps Members, states:\n\n The Grantee must keep time and attendance records on all AmeriCorps\n members in order to document their eligibility for in-service and post-service\n benefits. Time and attendance records must be signed and dated both by the\n member and by an individual with oversight responsibility for the member.\n\n\nThe 2005 and 2006 AmeriCorps Special Provisions, Section IV.C.1 Member Enrollment -\nMember Enrollment Procedures states:\n\n Member recruitment, selection and enrollment requirements are in the\n Corporation\xe2\x80\x99s regulations at 45 C.F.R. Part 2522. In addition, the following\n apply:\n\n a. An individual is enrolled as an AmeriCorps member when all of the\n following have occurred:\n\n i. He or she has signed a member contract;\n ii. The program has verified the individual's eligibility to serve;\n iii. The individual has begun a term of service; and\n iv. The program has approved the member enrollment form in WBRS.\n\n 37\n\x0c b. Prior to enrolling a member in AmeriCorps, programs make commitments\n to individuals to serve. A commitment is defined as signing a member\n contract with an individual or otherwise entering into a legally enforceable\n commitment as determined by state law.\n\n c. Within 30 calendar days of entering into a commitment with an individual,\n the grantee or sub-grantee will notify the Corporation of the commitment\n via WBRS by enrolling the individual as a member.\n\n d. Member Enrollment: Within 30 calendar days of the member's starting\n service, the program must complete and approve the enrollment form in\n WBRS.\n\n e. If a commitment does not result in a member actually being enrolled, the\n program must cancel the commitment in WBRS within 30 calendar days\n of the member\xe2\x80\x99s expected start date. If a grantee or sub-grantee does not\n complete an enrollment within 30 days of the member\xe2\x80\x99s expected start\n date, the grantee and sub-grantee will receive notification that the\n timeframe has expired. The program will then have 15 calendar days to\n complete the enrollment before the commitment is removed from WBRS.\n\nRecommendations\n\nWe recommend that the Corporation:\n\n 4.a. Disallow and recoup, if used, education awards and any accrued interest awards\n (interest forbearance) for members that did not complete their service;\n\n 4.b. Ensure that ServeMinnesota provides training to the subgrantees so they (1) are\n familiar with program requirements and provisions for updating members status in\n WBRS or other applicable systems, including members who exit the program early;\n and (2) do not include member service hours without a signed AmeriCorps contract;\n and\n\n 4.c. Instruct ServeMinnesota to strengthen controls and monitoring over member\n timesheet preparation.\n\nServeMinnesota\xe2\x80\x99s Response\n\nServeMinnesota indicated that the two members at Red Lake have already served the\nadditional hours needed or are working out a schedule to serve the necessary hours to earn\nthe education awards. Its review showed a variance between hours in WBRS and timesheets\nto be 7.9 hours for one member and 32.4 hours for the other. The member who plans to serve\nthe additional hours has accessed his award in the amount of $3,714. For YMCA, the\nmember is willing to make up the necessary hours to earn the award.\n\n 38\n\x0cServeMinnesota has always provided training for its subgrantees so that they are familiar\nwith program requirements and provisions for updating each member\xe2\x80\x99s status in WBRS. In\nthe near future, this will be done for the My AmeriCorps portal and ServeMinnesota\xe2\x80\x99s online\nreporting system, which are replacing many functions of WBRS.\n\nServeMinnesota has also implemented a new electronic timekeeping system which provides\na secure (password protected) reporting system for member timesheets. Unique features of\nthis system include: separate tracking of service hours, fundraising hours, and training hours\nand an automatic calculation of hours which eliminates mathematical errors.\n\nAuditor\xe2\x80\x99s Comment\n\nAlthough our review showed variances of over 50 hours per member, as indicated in the\nfinding, ServeMinnesota advised that its review showed variances between timesheets and\nWBRS records of 7.9 hours and 32.4 hours for the Red Lake\xe2\x80\x99s full-time members. However,\nServeMinnesota did not provide data to substantiate its calculations. The Corporation should\ndetermine the facts.\n\nAlthough ServeMinnesota indicated that Red Lake and YMCA members have recently\nserved or are willing to serve to make up the hours necessary to earn an education award,\nnone of these members are authorized to earn hours outside their terms of service and can not\nnow serve additional hours to earn an education award. The required service completion\ndates for the three members were:\n\nRed Lake Member A September 26, 2005\nRed Lake Member B September 25, 2006\nYMCA Member A January 31, 2006\n\nRed Lake\xe2\x80\x99s full-time members were subject to Section 139(b)(1) of the National Service\nTrust Act of 1993, 42 U.S.C. \xc2\xa7 12593(b)(1), which provides that a term of service shall run\nfrom \xe2\x80\x9ca period of not less than 9 months and not more than 1 year.\xe2\x80\x9d The YMCA member\nserved reduced hours of part-time service subject to 42 U.S.C. \xc2\xa7 12593(b)(2), which states\nthe member must serve \xe2\x80\x9cnot less than 900 hours during a period of \xe2\x80\x93\n\n (A) not more than 2 years; or\n (B) not more than 3 years if the individual is enrolled in an institute of higher\n education while performing all or a portion of the service.\xe2\x80\x9d\n\nIt is beyond the period of time for these members to complete the required service hours.\nOur findings and recommendations remain unchanged. The Corporation should also follow\nup with ServeMinnesota to determine whether the enhanced monitoring system and\nelectronic timekeeping system are implemented and effective.\n\n\n\n\n 39\n\x0cFinding 5. Costs Claimed Were Not in the Approved Budget\n\nRed Lake\n\nRed Lake claimed $3,246 Federal share costs for annual AmeriCorps celebrations and other\nholiday events in the Member Travel and Training budget line item. Although these costs\nwere supported, there was no corresponding budget established for these costs. Red Lake\nmisreported these costs so that the established budget for each line item would not be\nexceeded. This practice had the effect of circumventing the established budget. As a result,\nwe questioned $3,246 because these costs were not in the approved budget and therefore, not\nallowable.\n\nCriteria\n\nThe 2005, 2006, and 2007 Grant Agreements between ServeMinnesota and Red Lake,\nSection V. Consideration, states, \xe2\x80\x9cFederal CNCS AmeriCorps funding shall be used to pay\nbudgeted expenditures for costs outlined in the approved budget.\xe2\x80\x9d In addition, Section X.a.\nAllowability of Costs, state:\n\n For federal funds, allowability of costs incurred under this AGREEMENT\n shall be determined in accordance with the procedures and principles given in\n federal publications \xe2\x80\x9cOffice of Management and Budget\xe2\x80\x9d (OMB). For all\n funds, no claim for materials purchased in excess of budget categories or\n program services not specifically provided for in this AGREEMENT by the\n Subgrantee will be allowed by ServeMinnesota unless approved in writing by\n ServeMinnesota and such approval shall be considered to be a modification of\n the AGREEMENT.\n\nSPNN\n\nOur review of subgrantee expense reports found that costs claimed under the Personnel\nExpense Category included $16,665 Federal share and $22,515 match for contract and\nconsulting expenses. Although these costs were supported, SPNN misclassified these\nservices costs in the Personnel Expense Category. Instead of revising the budget, costs were\nmisreported so that the established budget for each line item was not exceeded. This practice\nhad the effect of circumventing the established budget. Although there was a line item in the\napproved budget for consultant services, there were no funding budgeted. As a result, we\nquestioned $16,665 of Federal share and $22,515 of costs claimed.\n\nCriteria\n\nThe 2005, 2006, and 2007 Grant Agreements between ServeMinnesota and SPNN, Section\nV. Consideration, states, \xe2\x80\x9cFederal CNCS AmeriCorps funding shall be used to pay budgeted\nexpenditures for costs outlined in the approved budget.\xe2\x80\x9d In addition, Section X.a.\nAllowability of Costs, states:\n\n\n\n 40\n\x0c For federal funds, allowability of costs incurred under this AGREEMENT\n shall be determined in accordance with the procedures and principles given in\n federal publications \xe2\x80\x9cOffice of Management and Budget\xe2\x80\x9d (OMB). For all\n funds, no claim for materials purchased in excess of budget categories or\n program services not specifically provided for in this AGREEMENT by the\n Subgrantee will be allowed by ServeMinnesota unless approved in writing by\n ServeMinnesota and such approval shall be considered to be a modification of\n the AGREEMENT.\n\nYMCA\n\nYMCA misclassified and inaccurately reflected program costs under various budget line\nitems within each budget category. Examples of misclassification include:\n\n \xe2\x80\xa2 Personnel expenses and fringe benefits were misclassified as program evaluation\n expenses; and\n\n \xe2\x80\xa2 Member\xe2\x80\x99s living allowances and worker compensation costs were misclassified as\n members FICA.\n\nYMCA personnel indicated that they were unaware that this was an improper practice. We\ndid not question these costs because, once the amounts are correctly reclassified to the\ncorrect budget line items, YMCA will not have exceeded its budget category limitation.\n\nCriteria\n\nThe 2005, 2006, and 2007 Grant Agreements between ServeMinnesota and YMCA, Section\nX.b. Expense Records, states, \xe2\x80\x9cThe Subgrantee shall maintain books, records, documents,\nand other evidence pertaining to the costs and expenses of implementing this Agreement to\nthe extent and in such detail as will accurately reflect all gross costs, direct and indirect costs,\nof labor materials, equipments, supplies, and other costs and expenses of whatever nature.\xe2\x80\x9d\n\n\nRecommendations\n\nWe recommend that the Corporation:\n\n 5.a. Determine the allowability of the costs not approved in the budget and recoup any\n disallowed questioned costs and applicable administrative costs; and\n\n 5.b. Instruct ServeMinnesota to develop adequate procedures and monitoring controls to\n ensure its subgrantees claim costs in accordance with the approved budget and\n classify costs correctly so that the approved budget is not circumvented.\n\n\n\n\n 41\n\x0cServeMinnesota Response\n\nServeMinnesota indicated that Red Lake will follow the required procedure for a budget\nrevision in the future if there are costs that do not fall in a specific approved budget line item.\nFor SPNN, ServeMinnesota concurred that those contract costs should have been reclassified\nin the budget approval process, rather than entered as personnel costs in the first program\nyear. For YMCA, accounting procedures have been adjusted to classify costs in the correct\nbudget areas.\n\nServeMinnesota provides annual fiscal training for all subgrantees. This training includes a\ndiscussion of budget and approval requirements for budgetary changes. ServeMinnesota also\nhas a 3rd quarter match review, where it examines the source documentation for one month\nthat ties to the subgrantees\xe2\x80\x99 reports. Each year, ServeMinnesota makes fiscal site visits with\nits high-risk subgrantees to ensure that all of the supporting documentation is in order and is\ncorrectly classified in their reports.\n\nServeMinnesota has always had procedures and monitoring controls in place. The auditors\nreview helped us to strengthen these procedures and controls.\n\nAuditor\xe2\x80\x99s Comment\n\nServeMinnesota\xe2\x80\x99s planned actions with regard to the unbudgeted costs for Red Lake are\nunclear although it plans positive action to avoid incurring costs without a corresponding\nbudget line item. The costs were questioned because they were not allocable/allowable in the\napproved budget. The Corporation should take the recommended actions.\n\n\nThis report is intended for the information and use of the Office of Inspector General,\nCorporation management, ServeMinnesota, and the U.S. Congress. However, this report is a\nmatter of public record and its distribution is not limited.\n\n\n\n\nWoodbridge, Virginia\nMarch 6, 2008\n\n\n\n\n 42\n\x0c APPENDIX A\n\nServeMinnesota\xe2\x80\x99s Response to Draft Report\n\x0cFrom: Audrey Suker [audrey@serveminnesota.org]\nSent: Wednesday, March 05, 2008 6:04 PM\nTo: James B. Elmore\nSubject: Minnesota's Response to Draft IG Report\n\nAttachments: Draft Recommendations Response (3).doc; Draft Report Errors.doc\n\nHello James,\n\nI\xe2\x80\x99ve attached Minnesota\xe2\x80\x99s response to the Draft Report as well as a document that describes\nsome minor errors in the draft report.\n\nPlease let me know if you have questions about any of this or need any further information.\n\nAudrey Suker\nExecutive Director\nServeMinnesota\n431 South 7th Street, Suite 2540\nMinneapolis, MN 55415\nPhone: 612-333-7738\nFax: 612-333-7758\naudrey@serveminnesota.org\n\nServeMinnesota is a catalyst for positive social change, working with AmeriCorps and\ncommunity partners to meet critical needs in Minnesota. ~ www.serveminnesota.org\n\x0c OIG Recommendations\nRecommendations - Pages 19 \xe2\x80\x93 24\n\nWe recommend that the Corporation:\n\n1.a. Resolve the questioned costs and recoup any disallowed and applicable\nadministrative costs; and\n1.b. Ensure that ServeMinnesota trains and monitors its subgrantees in establishing\ncontrols that specifically address the errors and weaknesses identified above. This effort\nincludes developing a record-keeping system such that grant documentation is retained and\nreadily accessible; develop policies and procedures to ensure costs claimed are properly\nsupported by its accounting records and source documentation; design controls to verify the\naccuracy of costs claimed; design proper allocation methodology for costs; and implement\nprocedures requiring appropriate personnel to review FSRs before they are submitted. The\nreviews should include tracing reported amounts on the FSRs to supporting documentation\nand verifying the accuracy of the data through appropriately designed analysis.\n\nServeMinnesota\xe2\x80\x99s Response\n1.a.\n\nFederal and match costs reported lack sufficient supporting documentation.\n\nAdmission Possible \xe2\x80\x93 Page 19 (match \xe2\x80\x93 20,231)\nAdmission Possible agrees with the audit findings and acknowledges the errors made in\nprior years. It should be noted that these variances and errors were not found in the\nprogram year just ended. The staff members responsible for journal entries during that time\ndid not have accounting or finance backgrounds and had only limited accounting skills.\nGiven the small size of the organization the role encompassed multiple office and\nadministrative functions, not exclusively accounting. The organization continues to place an\nincreasing emphasis on staff competency with regard to accounting functions. Current\naccounting staff members understand the importance and process of using source\ndocumentation to generate financial entries. In addition to staff changes, Admission\nPossible has also instituted financial system enhancements that provide more accurate\nfinancial reporting. In prior years, FICA was not differentiated from other payroll taxes.\nToday FICA is reported directly from payroll registers as a separate expense line item with\nclear distinction between FICA related to staff members and AmeriCorps members. Further,\nthe organization has made financial system enhancements that allow for sub-accounts, e.g.\nsub-accounts in the transportation line item that track expenses related to staff members\nversus expenses for AmeriCorps members. The sub-account structure of the accounting\nsystem now provides a more sophisticated mechanism for reporting different forms of\nexpenses. Admission Possible continues to place emphasis on ensuring that staff members\ninvolved in grant accounting have a comprehensive understanding of the governing rules\nand internal systems. The organization, as it grows, is increasing its capacity in the\naccounting area and audit findings at the end of the period under review demonstrate a\nnoticeable improvement in that regard. The organization believes it has taken appropriate\nmeasures to prevent a recurrence of these errors.\n\n\n\n\n 1\n\x0cAdmission Possible had much more match then required, and even after removing these\nquestioned match costs from their financial reports they are still above the minimum match\nrequirements.\n\nDuluth Area Family YMCA \xe2\x80\x93 Page 20 (Fed Costs \xe2\x80\x93 411)\nOn two occasions of the overstated claims, numbers were reversed during clerical entry.\nThe duplicate entry was also a clerical error. The accounting department and the program\ndirector do review the reports to try and minimize clerical errors\n\nMinnesota Literacy Council \xe2\x80\x93 Page 20\n(Match \xe2\x80\x93 6,100)\nMLC management agrees with this finding. In February of 2007 the payroll and general\nledger systems were re-designed in a manner to eliminate the risk of errors like this in the\nfuture.\n\n(Fed Costs \xe2\x80\x93 567)\nMLC management agrees with this finding. The payroll system was re-designed in February\nof 2007 to accurately capture member costs by grant so the intermediate spreadsheet is no\nlonger needed to calculate costs. This will minimize the risk of errors.\n\nThis was a documented and allowable expense however it was in the wrong program year.\n\n(Match \xe2\x80\x93 2,465)\nMLC management agrees with this finding. Management suggests replacing these costs\nwith other in-kind match that had not previously been reported.\n\nSt. Paul Neighborhood Network \xe2\x80\x93 Page 20-21\n(Fed Costs - 8,365, Match Costs \xe2\x80\x93 34,899)\nThe Sub-Grantee has changed reporting procedures to verify General Ledger and Payroll\nRegister amounts prior to reporting to the Commission.\n\nAfter thorough review the program found they had additional match amounts for each\nprogram year:\n Program Year 04-05: $5250 in program management costs donated to the program\n Program Year 05-06: $6131 in Equipment donated to the program\n Program Year 06-07: $6600 in Supervisor costs donated to the program\n\nServeMinnesota is in the process of collecting and reviewing this documentation.\n\n(Fed Costs \xe2\x80\x93 14,713, Match Costs \xe2\x80\x93 2,596)\nComputation errors occurred when the payroll register records were transferred to the\nSERF. This was due to manually subtracting staff costs from the gross totals for the\nprogram in the register to derive living allowance amounts. Following this audit, the Sub-\nGrantee separated all staff costs from the register record to another department\nclassification to ensure this computation error will not occur in future.\n\nThe unsupported living allowances and FICA costs for the 2006-2007 program year, in the\namount of $9,596 Federal costs and $1,693 match costs have already been corrected.\nServeMinnesota had instructed the subgrantee to reduce their expense by these amounts\non their final report for that program year before the program year was closed.\n\n\n\n\n 2\n\x0cCosts claimed to the wrong grant.\n\nMinnesota Literacy Council \xe2\x80\x93 Page 22 (Fed Costs \xe2\x80\x93 1,600, Match costs \xe2\x80\x93 282 over &\nshort between grants)\nMLC management agrees that the living allowance was incorrectly distributed, however the\ntotal costs were correct, and the net difference between the Formula and Competitive grants\nis zero. The payroll system was re-designed in February of 2007 to accurately capture\nmember costs by grant so the intermediate spreadsheet is no longer needed to calculate\ncosts. This will minimize the risk of errors.\n\n(Fed costs \xe2\x80\x93 7,653)\nThe non-salary/benefit related common cost for PY 2006-2007 were incorrectly allocated\nbased on budgeted percentages of salaries. This was a departure from the PY 2004-2005\nand PY 2005-2006 methodology which allocated these types of costs based on the number\nof members under each grant, and has since been corrected.\n\nSt. Paul Neighborhood Network \xe2\x80\x93 Page 22-23 (Match \xe2\x80\x93 5,900)\nSt. Paul Neighborhood Network management agrees with this finding, and it was corrected\nin subsequent years. The subgrantee had match over the required amount in sections 1 &\n3, and even after removing this amount from their report they are still above the minimum\nmatch required in sections 1 & 3.\n\n\nCredits not applied.\n\nAdmission Possible \xe2\x80\x93 Page 23 (Match \xe2\x80\x93 3,116)\nAdmission Possible acknowledges the errors in applying credits against reported expenses\nin prior years. It should be noted that the variances and errors were not found during the\nprogram year just completed. The organization has made efforts to build its accounting\ncapacity. As the organization grows, the staff roles become more specialized. This role\nspecialization allows for a more complete and comprehensive understanding of reporting\nand accounting requirements. Admission Possible has also taken steps to improve\nstandard procedures to match credits with corresponding expenses. The organization more\nfully utilizes the functionality of its accounting software to aid in that effort. As an example,\nthe reimbursement received from Southwest State University that was missed would not\noccur in the systems and procedures environment today. Today when a check is issued to\npay the expense, immediately a receivable is generated for the college or university that will\nbe reimbursing Admission Possible. We are no longer reliant on remembering that an\napplicable credit will be received at a future date.\n\nAdmission Possible had much more match then required, and even after removing these\nquestioned match costs from their financial reports they are still above the minimum match\nrequirements.\n\nDuluth Area Family YMCA \xe2\x80\x93 Page 23 (Match Costs \xe2\x80\x93 1,294)\nThis issue resulted from the timing of payments, and getting them credited back to the\ncorrect line items. Our accounting system has been adjusted to make sure that credits are\napplied to the correct line items.\n\nThe subgrantee was above their minimum match requirements, and even after reducing the\nmatch costs by these amounts, they are still above their minimum match requirements.\n\n\n\n 3\n\x0cMinnesota Literacy Council \xe2\x80\x93 Page 24 (Fed Costs \xe2\x80\x93 417, Match \xe2\x80\x93 73)\nMLC management agrees with this finding. Since the payroll system was re-designed, it will\nbe easier to compare YTD numbers from the payroll system to the general ledger to\nminimize the risk of errors of this sort.\n\n1.b. ServeMinnesota provides an annual fiscal training for all of the subgrantees. This\nyear that training included having the subgrantees bring the general ledgers from their\naccounting systems and their financial report (SERF) for that same time period and making\nsure that they knew both how these reports should tie together and that they did tie together.\nAlso, making sure that if they did not tie together they must be able to explain any variances.\nWe also have a 3rd quarter match review, where we examine the source documentation for\none month that ties to the subgrantees reporting. Each year we also have fiscal site visits\nwith our high risk subgrantees to make sure that all of there supporting documentation is in\norder. This year we also implemented an enhanced monitoring system that each of our\nsubgrantees must complete which includes among others, systems on Financial\nManagement, Documentation of Matching Funds, and Reimbursement. Completing these\nsystems includes documenting their procedures for each of those items, and reporting who\nis responsible for those tasks. At the end of each program year all of our subgrantees must\ncomplete a close out form which includes telling us where the previous years documentation\nwill be stored, and who the contact person will be if that documentation must be accessed.\n\nFor our sub-grantees, the total amount of Federal share questioned costs over the six\norganizations that were audited was $51,495 for an average of $8,583/grantee or .005 of the\ntotal amount audited. The audit also included examining the matching requirements of the\nfederal awards. For us as an organization we had no questioned costs associated with our\nmatching funds. Across our six sub-grantees there was a total of $104,648 of matching\nfunds that were questioned for an average of $17,441/grantee or .011 of the total claimed\ncosts.\n\nRecommendations - Pages 25-27\n\nWe recommend that the Corporation:\n\n2.a. Disallow and recoup the questioned costs and applicable administrative costs;\n2.b. Train ServeMinnesota and its subgrantees regarding applicable cost principles and\ngrant regulations; and\n2.c. Instruct ServeMinnesota to develop and implement procedures and controls to\nensure that claimed costs are allowable and allocable in accordance with applicable costs\nprinciples, including thorough reviews of costs claimed on FSRs to supporting\ndocumentation to determine allowability. Once implemented, review costs claimed to ensure\nthat the procedures are effective.\n\nServeMinnesota\xe2\x80\x99s Response\n2.a. In the spirit of promoting service and volunteerism ServeMinnesota believes it is\nimportant to provide recognition to volunteers willing to give significant time to ensure the\nsuccess of AmeriCorps programming in Minnesota. Consistent with this belief,\nServeMinnesota has provided $20 - $25 dollar gift cards to individuals who have served as\npeer reviewers and have provided approximately 16 hours of time to make a meaningful\ncontribution to this process.\n\n\n\n\n 4\n\x0cRegarding the auditors questioning of costs associated with lobbying ServeMinnesota\ncontinues to believe that the activities were educational and not lobbying. ServeMinnesota\ndoes agree that a $200.00 expense that was for catering services should not have been\ncharged to federal funds and is in agreement that $200.00 should be returned to CNCS.\n\n2.b. ServeMinnesota\xe2\x80\x99s findings regarding allowability of expenses were not due to lack of\ntraining or understanding of cost principles but rather differences in interpretation.\n\nManagement response from our subgrantees is as follows:\n\nAdmission Possible \xe2\x80\x93 Page 26 (Match \xe2\x80\x93 5,459)\nAdmission Possible acknowledges with errors found in claiming unallowable match costs in\nprior years. It should be noted that those errors were not discovered in the program year\njust ended. The inclusion of unallowable entertainment costs was a result of a\nmisinterpretation of the governing rule. The inclusion of unallowable fundraising costs was a\nresult of an entry error into the financial software. Admission Possible understands the\nimportance of grant management and application of governing rules. The organization has\ntaken steps to increase its staff capacity in both the grant management and grant\naccounting functions. Further, the organization has made financial system enhancements\nthat make class accounting easier to understand and apply. The class structure of the\naccounting system now provides clear distinction for expenses that are includible and\nallowable under the grant from expenses that are unallowable. Admission Possible\ncontinues to place emphasis on ensuring that staff involved in grant management and\naccounting have a comprehensive understanding of the governing rules and its internal\nsystems. It has developed systems whereby the class assignment of an expense is\nreviewed by at least two staff members with appropriate skill and understanding to ensure\ncompliance with the governing rules and regulations.\n\nAdmission Possible had much more match then required, and even after removing these\nquestioned match costs from their financial reports they are still above the minimum match\nrequirements.\n\nCommonBond Communities \xe2\x80\x93 Page 26 (Fed Costs \xe2\x80\x93 25)\nCommonBond has already reduced its claimed reimbursable costs in the amount of $25 for\nthe identified unallowable costs in program year 2006-2007. We will not claim another cost\nlike this for reimbursement.\n\n2.c. As noted in 2 b. ServeMinnesota does have procedures and controls and the audit\nhas provided clarification on items where there is room for varying interpretations of cost\nprinciples.\n\nRecommendations - Page 28-33\n\nWe recommend that the Corporation:\n\n3.a. Verify that ServeMinnesota develops and implements more effective control\nprocedures and closely monitors its subgrantees to ensure prompt and complete financial\nand programmatic reporting, as well as member evaluations, in accordance with the\nServeMinnesota requirement;\n3.b. Instruct ServeMinnesota to follow up with Red Lake to ensure that its members\nreceived an evaluation.\n\n\n\n 5\n\x0c3.c. Instruct ServeMinnesota to provide a refresher course for its subgrantees on\nprogram compliance requirements, including report submissions, documenting member\norientations, and the important role training and evaluations play in member development.\n\nServeMinnesota\xe2\x80\x99s Response\n3.a. All subgrantees understand the reporting requirements and will take appropriate\ncorrective measures to ensure that future reporting remains in compliance. ServeMinnesota\nhas implemented a new policy regarding timeliness of reporting and meeting deadlines.\n\nAll programs are required to meet due dates for reporting, document submissions, SERFS,\ncloseout forms, surveys, RSVPs for meetings and any additional requests made by both\nServeMinnesota and CNCS.\n\nReasonable requests for extensions must be made in writing to subgrantee\xe2\x80\x99s Program\nOfficer prior to the due date and will be granted on a case by case basis. Late reporting\nwithout written permission for an extension will result in withholding of the program\xe2\x80\x99s\npayment (until obligation is fulfilled) and will impact recommendations to CNCS for continued\nprogram funding.\n\n3.b. On November 11, 2007 Red Lake program staff faxed copies of 2 of the 4 missing\nmember evaluations as requested by the auditor. ServeMinnesota staff had a conversation\nwith Red Lake clarifying that half time members are required to have 2 evaluations. This\ninformation was also reviewed by ServeMinnesota staff at a site visit on 12/11/07.\n\n3.c. ServeMinnesota has always provided training for it\xe2\x80\x99s subgrantees on program\ncompliance and member development at the start of each program year.\n\nWe have now implemented an enhanced monitoring system which requires programs to\nstandardize their operations. This instrument consists of fourteen systems, each tailored to\na particular area of program or grants management. ServeMinnesota staff individually\nreviews all 14 systems for each subgrantee.\n\nThis tool provides the following:\n \xe2\x80\xa2 A point of intervention whereby program and ServeMinnesota staff can address\n operational challenges pertaining to grants management.\n \xe2\x80\xa2 Identifies program operations to ensure standardization and in some cases program\n compliance of some AmeriCorps Provisions.\n \xe2\x80\xa2 Serves as a model for prospective programs to see the operational systems that are\n required to administer an AmeriCorps program.\n\nRecommendations - Page 33-36\n\nWe recommend that the Corporation:\n\n4.a. Disallow and recoup, if used, education awards and any interest forbearance for\nmembers that did not complete their service;\n4.b. Ensure that ServeMinnesota provides training to the subgrantees so they (1) are\nfamiliar with program requirements and provisions for updating members status in WBRS or\nother applicable systems, including members who exit the program early; and (2) do not\ninclude member service hours without a signed AmeriCorps contract; and\n\n\n\n\n 6\n\x0c4.c. Instruct ServeMinnesota to strengthen controls and monitoring over member\ntimesheet preparation.\n\nServeMinnesota\xe2\x80\x99s response\n4.a. During the exit conference ServeMinnesota was encouraged to direct program staff to\nhave members make up missing hours. We had 2 programs with questioned Ed awards;\nRed Lake and Duluth YMCA.\n The auditor created a spreadsheet to reconcile Red Lake member timesheets with what\nwas entered into WBRS. This spreadsheet indicated a variance in hours from the totals on\nthe timesheets and the amounts reported in WBRS to the Corporation. The variance from\nthe actual timesheet totals to the required 1700 hours were 7.9 hours for one member and\n32.4 hours for another member\nOne member has already served the additional 7.9 hours at the Red Lake Head Start\nSite. There is a timesheet with the member\xe2\x80\x99s and supervisor\xe2\x80\x99s signature verifying this.\nOne member intends on making up these hours but is working with the program and a site\nto work out this schedule. He has accessed his award in the amount of $3,714\nDuluth YMCA had a member that left orientation early for personal reasons and served 11\nhours prior to signing her contract. At the end of the year she had over served by 6.5 hours\nresulting in a shortfall of 4.5 hours. The member is willing to make up those hours to fulfill\nher term.\n4.b. ServeMinnesota has always provided training for its sub grantees so that they are\nfamiliar with program requirements and provisions for updating member\xe2\x80\x99s status in WBRS.\n(moving forward this will be done for the My AmeriCorps portal and ServeMinnesota\xe2\x80\x99s online\nreporting system which is replacing many functions of WBRS)\n\nWe have also implemented an enhanced monitoring system which requires programs to\nstandardize their operations. This instrument consists of fourteen systems, each tailored to\na particular area of program or grants management. ServeMinnesota staff individually\nreviews all 14 systems for each sub grantee and provides feedback to ensure compliance.\n\n4.c. ServeMinnesota has implemented a new electronic timekeeping system which\nprovides a secure (password protected) reporting system for member timesheets. Unique\nfeatures of this system include: separate tracking of service hours, fundraising hours and\ntraining hours and an automatic calculation of hours which eliminates mathematical errors.\n\nRecommendations - Page 36-38\n\nWe recommend that the Corporation:\n\n5.a. Determine the allowability of the costs not approved in the budget and recoup any\ndisallowed questioned costs and applicable administrative costs; and\n5.b. Instruct ServeMinnesota to develop adequate procedures and monitoring controls to\nensure its subgrantees claim costs in accordance with the approved budget and classify\ncosts correctly so that the approved budget is not circumvented.\n\nServeMinnesota\xe2\x80\x99s Response\n5.a.\n\nRed Lake Band of Chippewa \xe2\x80\x93 Page 36 (Fed Costs \xe2\x80\x93 3,246)\nIf there are costs that do not fit in a specific line item, we will follow the prescribed procedure\nfor a revision. We will ensure that this is not an issue in the future. The auditors did\n\n\n\n 7\n\x0cacknowledge that there was proper documentation for these costs, and they were an\nallowable cost.\n\nSt. Paul Neighborhood Network \xe2\x80\x93 Page 37 (Fed Costs \xe2\x80\x93 16,665, Match \xe2\x80\x93 22,515)\nThese contract costs should have been reclassified in the budget approval process rather\nthan entered as personnel costs in the first year. This problem was due to starting up as a\nnew program and the need to use contractors as staff. In the second program year, the\nbudget categories were changed to reflect these categories. The contractors were\nfunctioning as staff, it was an allowable expenditure that would have been approved if a\nbudget change had been requested.\n\nDuluth Area Family YMCA \xe2\x80\x93 Page 37\nThis issue results from an effort to have expenses inline with the budget, and changes in\nstaffing during the program year. Our accounting procedure has been adjusted to classify\ncosts in the correct budget areas.\n\n5.b. ServeMinnesota provides an annual fiscal training for all of the subgrantees. This\ntraining includes discussing the budget and when changes to budget require approval. We\nalso have a 3rd quarter match review, where we examine the source documentation for one\nmonth that ties to the subgrantees reporting. Each year we also have fiscal site visits with\nour high risk subgrantees to make sure that all of there supporting documentation is in order\nand is correctly classified in their reporting. ServeMinnesota has always had procedures\nand monitoring controls in place, the inspector general audit has helped us to be stronger in\nimplementing these procedures and controls.\n\n\n\n\n 8\n\x0c APPENDIX B\n\nCorporation for National and Community Service\xe2\x80\x99s Response to Draft\n Report\n\x0c NATIONAL &\n COMMUNITY\n SERVICE~\n\n\n To: Carol Bates, Assistan~~or General for Audit\n\n From: M g ~~Management\n Cc: Krist ain, Director o~rps\n Sherry Blue, Audit Resolution Coordinator\n\n Date: March 6, 2008\n\n Sub: Response to OIG Draft of Agreed-Upon Procedures of Grants Awarded to Serve\n Minnesota\n\n\n Thank you for the opportunity to review the draft Agreed-Upon Procedures report of the\n Corporation's Grants awarded to Serve Minnesota.\n\n. The Office of Grants Management does not have specific comments at this time. The\n Corporation will address all of the findings during audit resolution after the audit is issued as\n final. .\n\x0c"