Rhode Island EMA Violations: See the List
Thursday, May 15, 2014
See the violations of federal grant guidelines an audit found in the state emergency management agency.
Federal Payroll Rules
RIEMA is not compliant with federal cost principles governing expenditures for employee compensation charged directly to federal grants, specifically, the tracking and recording or employee time and effort charged to a grant. RIEMA does not have an adequate method to document employee assignments and related federal funding, and time sheets lack evidence of supervisory approvals.
Additionally, RIEMA does not apply its federally approved indirect cost rate to employee compensation; employees who work indirectly on programs are charged directly to grants. RIEMA is also unable to substantiate the expenditures for payroll to support its draw down of federal funds. This may result in RIEMA owning money to the federal government. Additionally, charging employees to the wrong grant results in unnecessary use of state general revenue for wages and benefits when the cost could be recovered through federal grants.
Rules on Availability of Funds
RIEMA was not compliant with Federal Emergency Management and Assistance regulations regarding period of availability of funds.
Specifically, RIEMA has charges expenditures to grants, and made journal entries transferring expenditures to other grants, that occurred outside of the perior of performance. The Bureau of Audit's report concluded that:
• Program staff is not involved in the approval process of journal entries transferring expenditures between grants.
• Numerous journal entries to transfer expenditures to other grant programs and years were made without adequate documentation.
• Invoices and documentation were sent to the RIEMA fiscal office months before the grant period of availability ended, but not processed timely, contributing to disbursements outside the period of availability.
To view the "Period of Availability of Funds" regulation, click here.
Internal Controls in Journal Entries
RIFANS journal approval process procedures require supporting documentation for journal entries to be attached to RIFANS electronically or maintained at the agency, but RIEMA journal entries are being processed and approved with little or no documentation to support the transfer of funds from one grant to another, or from one grant year to another grant year. The processing and approval of journal entries at RIEMA lacks the following internal controls:
• Verifying whether journal entry transfers and allowable under grant guidance
• Validating the activity and journal entry date within the period of performance
• Considering the remaining grant balance
• Notifying the grant and program managers administering the grants of the transfer of expenditures
The lack of controls illustrated has resulted in inaccurate grant balances, over/under spending of grants, and expenditures that do not meet the criteria set forth in the grant guidance kits.
Federal Cost Principles for Inventory Records
RIEMA and its sub-grantees are required to maintain inventory for equipment purchased with federal funds in compliance with federal requirements 44CFR 13.32 and State procedures (FACTS).
The Bureau of Audit’s review of the equipment procedures and transactions showed several areas where procedures and controls could be improved, such as:
• Office of Accounts and Control form SFA-12 is not being submitted for all required equipment purchases; therefor, some equipment is not properly recorded into the state system and does not have the required state property tags.
• Inventory for federal grant purposes is incomplete and does not include the source of federal funds used to acquire the asset.
• Not all sub-grantees are reporting equipment inventory information to RIEMA as required by 44 CFR 13.32.
Inaccurate and incomplete equipment controls reduce the ability to safeguard assets, Lack of compliance with federal requirement noted in the second bullet point could result in disallowed costs. Furthermore, the lack of compliance with state inventory requirements affects the state fixed asset inventory records.
Monitor Sub-Recipients Controls
RIEMA does not have adequate controls in place to ensure that its sub-recipients have taken appropriate corrective action to resolve OMB Circular A-133 audit findings. OMB Circular A-133 requires all auditees expending more than $500,000 in federal grants meet the audit requirements stated here.
The areas of noncompliance include:
• RIEMA did not identify the audit finding in the Town of Johnston audit report related to Cash Management of its Disaster Grant-Public Assistance, CFDA #97.036 (2012-5). Consequently, RIEMA has not issued a management decision on this finding nor ensured it was resolved as is required by OMB Circular A-133.
• RIEMA does not have procedures in place to follow up on sub-recipient audit findings and corrective action plans, or for issuing management decisions.
• RIEMA did not ensure that sub-recipients had submitted all information related to an A-133 required audit as several pages relating to audit findings were missing from audit reports. Further, RIEMA did not obtain the missing information from either the entity website or federal single-audit clearinghouse and include it in the audit folder.
RI Purchasing Requirements
The Bureau noted three instances of noncompliance with state purchasing requirements. Three purchase orders, totaling $39,938.27, for hotel room rentals, training room rentals, equipment rental and meals at Rhode Island area hotels were processed as “single source,” rather than put out to bid.
Additionally, the requisitions for the purchase orders were created at least two weeks after the events were held. The purchases were paid for with EMPG 2011 funds.
State of RI Purchasing Regulations Section 9, Exceptions to Competitive Bidding Requirements, details allowed exceptions to competitive budding; hotel room rentals, training room rentals, equipment room rental, and meals are not allowable exceptions under the regulations.
Matching Funds Contribution Requirements
Two of the 19 grant programs the Bureau reviewed required a 50% State fund match: EMPG 2010 and EMPG 2011. As of the date of the Bureau’s audit, RIEMA does not centrally track the hard/soft/in-kind state match to federal grants. RIEMA reports the State funded match amounts in the quarterly Federal Financial Report (FFR/SF-425) as “Recipient share of expenditures.” The Bureau was unable to validate or review supporting documentation of the State funding match provided for EMPG 2010 and EMPG 2011 as it could not be provided by RIEMA.
Three Purchase Orders for training instructors totaling $9,625, funded by federal grant EMPG 2011 did not have an appropriate match of state funds. In accordance with the EMPG grant requirements, RIEMA must provide a match for EMPG expenditures. If it is not provided, the expenditures may be disallowed.
Advancements of Federal Funds
The Bureau noted three instances where RIEMA requested and received an advancement of federal funds (totaling $104,991,34) approximately one month prior to payment. The State Controller annually communicates the federal draw-down policy known as the Cash Management and Improvement Act (CMIA) which states that the draw down of funds should be based upon a reimbursement method, and that the request for federal grant reimbursement should be on a bi-weekly basis. Also, the CMIA policy further states, in the event that estimates or advancements of federal funds has been received by the agency, there should be a reconciliation of federal funds advanced to actual grant expenditures.
The Bureau found no reconciliations of advancements of federal funds to actual expenditures for the 19 grants reviewed.