Full text
Page 2
documentation related to these transactions and the inability to determine
eligibility of the expenditures, along with the $
questioned above,
Castro questioned total costs of $32,333,620.36 (see the attached schedule of
monetary benefits). Castro and Treasury OIG met with TMBCI personnel to
discuss the results of the desk review and the questioned costs.
Based on the results of its desk review, Castro determined that TMBCI did not
comply with the CARES Act and Treasury Guidance. Additionally, Castro
determined that the risk of unallowable use of funds is high. As such, Castro is
recommending that OIG pursue obtaining the missing documentation from TMBCI
personnel. Further, based on TMBCI’s responsiveness to Treasury OIG’s requests
and its ability to provide the documentation, Castro recommends Treasury OIG
determine if a full-scope audit is feasible.
In connection with our contract with Castro, we reviewed Castro’s desk review
memorandum and related documentation and inquired of its representatives. Our
review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to
express an opinion on TMBCI’s use of the CRF proceeds. Castro is responsible for
the attached desk review memorandum and the conclusions expressed therein.
Our review found no instances in which Castro did not comply in all material
respects with the Quality Standards for Federal Offices of Inspector General.
We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Deputy Assistant Inspector General for Audit, at (202) 487-8371.
cc:
Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Victoria Collin, Chief Compliance & Finance Officer, Office of Recovery
Programs, Department of the Treasury
Jamie S. Azure, Tribal Chairman, Turtle Mountain Tribal Council
Wayne Ference, Partner, Castro & Company, LLC
Page 3
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations,3 a questioned cost is a cost that is
questioned due to a finding:
(a) which resulted from a violation or possible violation of a statute,
regulation, or the terms and conditions of a Federal award, including for
funds used to match Federal funds;
(b) where the costs, at the time of the review, are not supported by
adequate documentation; or
(c) where the costs incurred appear unreasonable and do not reflect the
actions a prudent person would take in the circumstances.
Questioned costs are to be recorded in the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES).4 The amount will
also be included in the Office of Inspector General (OIG) Semiannual Report to
Congress. It is Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in accordance
with 5 USC Section 405(b) of the Inspector General Act of 1978.
Recommendation
Questioned Costs
Recommendation No. 1
$32,333,620.36
The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $32,333,620.36
is TMBCI’s expenditures reported in the grant-reporting portal that lacked
supporting documentation.
3 2 CFR § 200.84 – Questioned Cost
4 JAMES is Treasury’s audit recommendation tracking system.
Desk Review of the Turtle Mountain Band of Chippewa Indians
1
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
July 7, 2023
OIG-CA-23-026
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM:
Wayne Ference
Partner, Castro & Company, LLC
SUBJECT:
Desk Review of Turtle Mountain Band of Chippewa Indians
On August 10, 2021, we initiated a desk review of the Turtle Mountain Band of
Chippewa Indians’ (TMBCI) use of the Coronavirus Relief Fund (CRF) authorized
under Title VI of the Social Security Act, as amended by Title V Division A of the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act).1 The objective of
our desk review was to evaluate TMBCI’s documentation supporting its uses of
CRF proceeds as reported in the GrantSolutions2 portal and to assess the risk of
unallowable use of funds. The scope of our desk review was limited to obligation
and expenditure data for the period of March 1, 2020 through June 30, 2021 as
reported in Cycles 13 through 54 in the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed TMBCI’s quarterly Financial Progress Reports (FPRs) submitted in
the GrantSolutions portal through June 30, 2021;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021;5
1 P.L. 116-136 (March 27, 2020).
2 GrantSolutions, a grant and program management Federal shared service provider under the
U.S. Department of Health and Human Services, developed a customized and user-friendly
reporting solution to capture the use of CRF payments from recipients.
3 Calendar quarter ending June 30, 2020.
4 Calendar quarter ending June 30, 2021.
5 Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register 2021-00827.pdf
Desk Review of the Turtle Mountain Band of Chippewa Indians
2
3) reviewed Treasury Office of Inspector General (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;6
4) reviewed Treasury OIG’s monitoring checklists7 of TMBCI’s quarterly FPR
submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit reports, and
those issued by the Government Accountability Office and other applicable
Federal agency OIGs for internal control or other deficiencies that may
pose risk or impact TMBCI’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations (OI), the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee (PRAC),8 and Treasury OIG Office of Counsel
input on issues that may pose risk or impact TMBCI’s uses of CRF
proceeds;
7) interviewed key personnel responsible for preparing and certifying TMBCI’s
GrantSolutions portal quarterly FPR submissions, as well as officials
responsible for obligating and expending CRF proceeds;
8) made a non-statistical selection of contracts, grants, transfers to other
government entities,9 direct payments, aggregate reporting data,10 and
aggregate payments to individuals11 identified through GrantSolutions
reporting; and
9) evaluated documentation and records used to support TMBCI’s quarterly
FPRs.
6 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently Asked
Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021.
7 The checklists are used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews are designed
to identify material omissions and significant errors, and where necessary, include procedures for
notifying prime recipients of misreported data for timely correction. Treasury OIG follows the CRF
Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review Procedures Guide,
OIG-CA-20-029R to monitor the prime recipients quarterly.
8 Section 15010 of P.L. 116-136 established the Pandemic Response Accountability Committee
within the Council of the Inspectors General on Integrity and Efficiency to promote transparency
and conduct and support oversight of covered funds (see Footnote 18 for a definition of covered
funds) and the coronavirus response to (1) prevent and detect fraud, waste, abuse, and
mismanagement; and (2) mitigate major risks that cut across program and agency boundaries.
9 A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
10 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in
the GrantSolutions portal. Transactions less than $50,000 can be reported as an aggregate lump-
sum amount by type (contracts, grants, loans, direct payments, and transfers to other government
entities).
11 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.
Desk Review of the Turtle Mountain Band of Chippewa Indians
4
greater than or equal $50,000; therefore, we did not make a selection of
transactions from this category.
The number of transactions (20) we selected to test was based on TMBCI’s total
CRF award amount and our overall initial risk assessment of TMBCI. To allocate
the number of transactions (20) by obligation type (Contracts greater than or
equal to $50,000, Grants greater than or equal to $50,000, Transfers greater than
or equal to $50,000, Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals), we
compared the obligation type dollar amounts as a percentage of cumulative
obligations for Cycle 5.15 Additionally, Treasury OIG identified two anomaly
transactions which were already included in our transactions selected for testing
for Contracts greater than or equal to $50,000 and Direct Payments greater than or
equal to $50,000; therefore, these anomalies did not result in additional
transactions for testing. The transactions selected for testing were not selected
statistically, and therefore results cannot be extrapolated to the total universe of
transactions.
Background
The CARES Act appropriated $150 billion to establish the CRF. Under CRF,
Treasury made payments for specified uses to States; eligible units of local
governments; the District of Columbia and U.S. Territories, including the
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands; and Tribal
governments. Treasury issued a CRF payment to TMBCI for $54,827,702.70. The
CARES Act stipulates that a recipient may only use the funds to cover costs that—
(1) are necessary expenditures incurred due to the public health emergency
with respect to the coronavirus disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of
March 27, 2020; and
(3) were incurred between March 1, 2020 and December 31, 2022.16
15 Calendar quarter ending June 30, 2021.
16 P.L. 116-260 (December 27, 2020). The period of performance end date of the CRF was extended
through December 31, 2021 by the Consolidated Appropriations Act, 2021. The period of
performance end date for tribal entities was further extended to December 31, 2022 by the State,
Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act,
Division LL of the Consolidated Appropriations Act, 2023, PL 117-328, December 29, 2022, 136 Stat.
4459.
Desk Review of the Turtle Mountain Band of Chippewa Indians
5
Section 15011 of the CARES Act, requires each covered recipient17 to submit to
Treasury and the PRAC, no later than 10 days after the end of each calendar
quarter, a report that contains (1) the total amount of large covered funds18,19
received from Treasury; (2) the amount of large covered funds received that were
expended or obligated for each project or activity; (3) a detailed list of all projects
or activities for which large covered funds were expended or obligated; and (4)
detailed information on any level of sub-contracts or sub-grants awarded by the
covered recipient or its sub-recipients.
The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has authority to recoup funds in the event that it is determined
a recipient failed to comply with requirements of subsection 601(d) of the Social
Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Our review of TMBCI’s quarterly FPR submissions through June 30, 2021
identified reporting issues and variances, as detailed below.
Financial Progress Reports
TMBCI was required to submit Quarterly FPRs by the 10th day of the month
following quarter end unless it falls on a holiday. Based on our review of the
quarterly FPRs, TMBCI was not compliant with Treasury OIG Guidance20 for
Cycle 3.21
17 Section 15011 of P.L. 116-136 defines a covered recipient as any entity that receives large
covered funds and includes any State, the District of Columbia, and any territory or possession of
the United States.
18 Section 15010 of P.L. 116-136 defines covered funds as any funds, including loans, that are made
available in any form to any non-Federal entity, not including an individual, under Public Laws 116-
123, 127, and 136, as well as any other law which primarily makes appropriations for Coronavirus
response and related activities.
19 Section 15011 of P.L. 116-136 defines large covered funds as covered funds that amount to more
than $150,000.
20 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Reporting and
Record Retention Requirements OIG-CA-20-021; July 2, 2020.
21 Calendar quarter ending December 31, 2020.
Desk Review of the Turtle Mountain Band of Chippewa Indians
6
Obligation and Expenditure Variance
TMBCI’s cumulative expenditures for the period of March 1, 2020 to June 30, 2021
were $46,845,491.48. The expenditure detail total for Aggregate Payments to
Individuals provided by TMBCI personnel was higher than the obligated and
cumulative expenditure amount reported in GrantSolutions by $1,543,784.91.
Specifically, Aggregate Payments to Individuals in GrantSolutions was
$9,274,795.24 and the support provided included expenditures of $10,818,580.15.
TMBCI personnel told us that the cause of this variance was an erroneously
prepared spreadsheet.
Treasury OIG released CRF Frequently Asked Questions Related to Reporting and
Recordkeeping (Revised)22 (herein referred to as “FAQs”) to assist prime
recipients with their reporting and record keeping requirements. We found TMBCI
was not compliant with the following FAQs as the errors noted above have not yet
been corrected. The errors will require correction in subsequent cycles.
• “FAQ 57. If an error is identified or an addition/modification needs to be made,
is there an ability to amend the previous submitted data?
Yes, if a prime recipient determines corrections or additions are necessary, the
current GrantSolutions submission may be recalled, corrected, and
resubmitted within the first 10 days after the quarter end.”
• “FAQ 60. If a prime recipient reports a cost allocated to the CRF in one
reporting cycle, but subsequently determines to allocate that cost to a different
funding source, can the prime recipient remove the obligations and related
expenditures from its CRF reporting submission?
Yes, if a prime recipient determines corrections or additions to a quarterly
submission are necessary and the quarterly submission has already been
approved by Treasury OIG, changes to a previous quarterly submission may
be made in the subsequent reporting submission.”
Complaints Received by OIG and Related Eligible Costs23
Treasury OIG’s Office of Investigations (OI) received nine complaints detailing
instances in which the TMBCI allegedly used CRF proceeds for ineligible uses.
Treasury OIG personnel met with TMBCI officials to discuss the allegations and
22 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently
Asked Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021.
23 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently
Asked Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021, Question
#44 states, “The prime recipient should only report eligible costs for which obligations have been
made with CRF payments or specific determinations have been made related to using CRF funds.”
Desk Review of the Turtle Mountain Band of Chippewa Indians
7
based on information gathered during that meeting, OI referred the complaint to
the Office of Audit to review supporting documentation and determine whether
the amounts were eligible uses for the CRF. Castro has quantified those instances
where we were able to corroborate amounts related to the allegations as claimed
within GrantSolutions as of Cycle 5.24 As a result of our review of these complaints
that we were able to quantify as reported in GrantSolutions, Castro questions
expenditures of $
, with $7,508,564.41 out of this amount included and
questioned as part of our detailed transaction testing and $
of this amount
considered to be untested, as summarized in the Summary of Testing Results
section below. The complaints alleged that CRF proceeds were used for the
purchase of the following items:
Allegation #1:
Allegation #2:
Allegation #3:
Allegation #4:
Allegation #5: construction of a building to house a butcher business;
Allegation #6: construction and purchases for a fire and emergency medical
services facility;
Allegation #7:
Allegation #8:
Allegation #9: six miscellaneous budgeted expenditures.
For allegation numbers seven and eight, Treasury OIG personnel spoke with
TMBCI officials who claimed that CRF proceeds were not used to
or
. TMBCI personnel told OIG that they did use CRF funds to
. OIG confirmed the statements
made by TMBCI personnel by reviewing charges in GrantSolutions and
determined no additional work was required. Therefore, Castro did not perform
any additional procedures over these two allegation balances.
For allegation numbers one through six and number nine, Treasury OIG was
unable to conclude on eligibility based on the documentation provided by TMBCI.
As such, Castro requested documentation from TMBCI to support the eligibility of
expenditures for these allegations. Castro noted that TMBCI personnel did not
provide the requested expenditure documentation, such as invoices, to support
these amounts; therefore, Castro was unable to conclude whether the
expenditures related to the open allegations met the CARES Act eligibility
requirements. Specifically, Castro noted the following issues with these seven
allegations:
24 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
8
• For allegation number one, we were able to identify and quantify complaint
allegation expenditures of $
as reported in GrantSolutions within
the Direct Payments greater than or equal to $50,000 payment type, and
therefore question this amount as unsupported. Castro was unable to
conclude whether the expenditures related to the open allegations met the
CARES Act eligibility requirements because TMBCI did not provide us with
sufficient invoice expenditure documentation.
• For allegation numbers two through six and allegation number nine, we
noted that TMBCI provided us with underlying general ledger detail
population files utilized to generate its Cycle 525 GrantSolutions submission;
however, these general ledgers did not include sufficient descriptions
needed to determine if TMBCI claimed these expenditures within
GrantSolutions. Therefore, we were unable to quantify or question these
amounts. Additionally, for allegation numbers four and six we noted the
following:
o For allegation number four, we are questioning $
for the cost
that TMBCI reported in GrantSolutions within the Contracts
greater than or equal to $50,000 payment type because TMBCI did
not provide us with sufficient documentation to verify eligibility.
Additionally, we are separately questioning $
in costs
tested related to road repairs because TMBCI did not provide us with
sufficient documentation to verify eligibility, as discussed further in
our Contracts greater than or equal to $50,000 testing below.
Therefore, we question a total amount of $
related to this
allegation. However, the total amount tested did not agree with the
amount that TMBCI told us that they spent on this project, and
therefore we cannot determine whether there should be additional
questioned costs related to this allegation.
o For allegation number six, we are questioning $
in
similar costs related to an emergency response center because
TMBCI personnel did not provide us with sufficient documentation to
verify eligibility, as discussed further in our Direct Payments greater
than or equal to $50,000 testing below. However, the total amount
tested did not agree with the amount that TMBCI told us that they
spent on this project, and therefore we cannot determine whether
there should be additional questioned costs related to this allegation.
For the remaining complaint amounts, TMBCI personnel did not provide sufficient
invoice expenditure documentation or provide sufficient evidence needed for
Castro to verify amounts as reported in GrantSolutions. As such, we could not
25 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
9
determine a questioned cost amount. As such, we recommend that Treasury OIG
follow-up with TMBCI to quantify the remaining CRF expenditure amounts related
to these allegations and to obtain sufficient support needed to corroborate
whether these represent eligible CRF expenditures.
As discussed below in our Summary of Testing Results, TMBCI was not compliant
with the Coronavirus Relief Fund Guidance as published in the Federal Register on
January 15, 2021 (herein referred to as “Eligibility Criteria in the Federal
Register”), which states that:
“The requirement that expenditures be incurred ‘‘due to’’ the public health
emergency means that expenditures must be used for actions taken to respond
to the public health emergency. These may include expenditures incurred to
allow the State, territorial, local, or Tribal government to respond directly to
the emergency, such as by addressing medical or public health needs, as well
as expenditures incurred to respond to second-order effects of the emergency,
such as by providing economic support to those suffering from employment or
business interruptions due to COVID–19-related business closures. Funds may
not be used to fill shortfalls in government revenue to cover expenditures that
would not otherwise qualify under the statute. Although a broad range of uses
is allowed, revenue replacement is not a permissible use of Fund payments.”
Summary of Testing Results
Transactions selected for detailed review were not supported by documentation
and we were unable to determine if expenditures were allowable in accordance
with the CARES Act and Treasury’s guidance. We were unable to determine if the
Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Transfers to Other Government Entities greater than or equal to $50,000,
Direct Payments greater than or equal to $50,000, Aggregate Reporting less than
$50,000, and Aggregate Payments to Individuals tested were necessary
expenditures due to the COVID-19 public health emergency, were not accounted
for in the budget most recently approved as of March 27, 2020, and were incurred
during the covered period. The transactions selected for testing were not selected
statistically, and therefore results cannot be extrapolated to the total universe of
transactions.
The following table includes the total cumulative expenditure population amount
and the cumulative expenditure amount tested. Additionally, this table includes a
summary of Castro’s testing results over cumulative expenditure transaction
balances. Within the “Exception Noted: IPA [Independent Public Accountant]
Recommended for Treasury OIG Follow-up” section of this table, we have
included a summary of unsupported and ineligible exception balances identified
Desk Review of the Turtle Mountain Band of Chippewa Indians
11
amounts reported in GrantSolutions.
Contracts greater than or equal to $50,000
The TMBCI’s Contracts greater than or equal to $50,000 were not in compliance
with the CARES Act and Treasury’s Guidance As a result, we were unable to
determine if TMBCI met the eligibility requirements for two of the five
transactions tested due to the lack of supporting documentation. We selected five
transactions and requested documents to include, but not limited to, contracts,
purchase orders, resolutions, application and certificates for payment, invoices,
payment requests, and proof of payment. During our review of Contracts, we
identified exceptions within all five transactions selected for testing as listed
below:
Contract No.
(Transaction No. 1)
The purpose of Contract No.
was to provide paving and road
infrastructure services on roads that were preventing public safety and
public health personnel from accessing patients. Castro received support
for the obligated amount of $
as reported within
GrantSolutions. However, we reviewed the contractor’s application for
payment28 documentation and noted a variance in cumulative expenditure
amounts reported. The cumulative expenditure amount reported in
GrantSolutions of $
varied from the total amount of the
contractor's application for payment documentation support of
$
, resulting in a potential understatement of GrantSolutions
reported cumulative expenditures of $
.
As of TMBCI's Cycle 529 submission, the total cumulative expenditures of
$
from the contractor's application for payment
documentation support provided exceeded the total cumulative obligations
of $
as reported in GrantSolutions by $
. We noted
that TMBCI personnel did not provide detailed invoices to support these
expenditure amounts. Without detailed invoices, we were unable to make a
full assessment on the correct entries to cumulative expenditures to be
made to the contract obligation type in GrantSolutions.
TMBCI personnel did not provide sufficient documentation to support the
payment dates of the expenditures. TMBCI personnel confirmed that the
Tribe did not have readily available access to the checks.
28 The Contractor’s Application for Payment is used by TMBCI personnel to document work
performed under a contract and to request funds accordingly.
29 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
12
Castro requested documentation from TMBCI personnel to support use of
expenditures under the CARES Act Road Repairs project. TMBCI personnel
failed to provide documentation that these expenses were substantially
dedicated to mitigating or responding to the COVID-19 public health
emergency. Therefore, Castro was unable to conclude on whether the
expenditures met the eligibility requirements. As a result of the above
issues noted, the cumulative expenditure amount of $
as
reported in GrantSolutions is questioned due to a lack of sufficient
supporting documentation.
Contract No.
(Transaction No. 2)
The purpose of Contract No.
was to provide technology that would
allow a camera system for live instruction at local K-12 schools, with work
being done in the schools. TMBCI personnel did not provide us with a
contract between TMBCI and the vendor who was responsible for
supplying audio equipment to facilitate distance learning. Since TMBCI
personnel did not provide us sufficient support for the obligation amount
of $
reported in GrantSolutions, we were unable to determine
if this obligation was classified correctly as a contract. Additionally, without
the contract between TMBCI and the vendor, we were unable to determine
if expenditure amounts were incurred within the contractual period of
performance or whether they were completely incurred within the correct
expenditure categories and under the correct contract type.
TMBCI personnel stated that the Cycle 530 progress report was hastily
prepared with inadequate access to information. TMBCI personnel were
unable to locate the contract.
TMBCI was able to support the expenditure dates were within the period of
performance; however, TMBCI personnel did not provide sufficient
documentation to support the payment dates to the contractor as reported
within GrantSolutions. This did not result in questioned costs as the
expenditure amount of $
fell within the period of performance
of the CARES Act. TMBCI personnel confirmed that these checks were not
readily accessible to the Tribe.
Contracts were expected to be completed by December 30, 2020, the initial
CRF sunset date. As such, TMBCI did not include contract completion dates
in this contract.
30 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
13
Contract No.
(Transaction No. 3)
The purpose of Contract No.
was to provide engineering services for
critical roads that were impacting public safety and emergency medical
technicians’ access to patients. We did not receive contracts or other
obligating documentation applicable to support the obligation amount
reported in GrantSolutions of $
We followed up with TMBCI
personnel to provide applicable contract documents, but they failed to
provide a response or additional documentation. We were unable to
determine whether the obligation was appropriately reported under
Contracts greater than or equal to $50,000 within GrantSolutions, or should
have been reported under Direct Payments greater than or equal to
$50,000. Therefore, TMBCI personnel did not ensure that obligations were
sufficiently supported by documentation.
TMBCI personnel told us that the obligation records associated with this
contract were maintained by the Director of Transportation, resulting in the
TMBCI personnel’s inability to access the records to support the desk
review.
TMBCI was able to support the expenditure dates were within the period of
performance; however, TMBCI personnel did not provide sufficient
documentation to support the payment dates to the contractor as reported
within GrantSolutions. This did not result in questioned costs as the
expenditure amount of $
fell within the period of performance of
the CARES Act. TMBCI personnel confirmed that these checks were not
readily accessible to the Tribe.
Contract No.
(Transaction No. 4):
The purpose of Contract No.
was to purchase and deliver
gravel for transportation safety. Gravel was used to repair critical roadways
and driveways of tribal members that had been washed out by the spring
weather. The current conditions of the roads impeded public safety
personnel from reaching tribal members. We reviewed TMBCI's resolution
for contract number
and noted a variance in cumulative
obligation amounts reported. Specifically, the cumulative obligation
amount reported in GrantSolutions of $
differed from the total
obligation amount authorized within TMBCI's resolution of $
resulting in a variance of $
Additionally, the contract did not
provide a period of performance. Without this information, we were unable
to verify if the expenditures were incurred within the period of
performance.
Desk Review of the Turtle Mountain Band of Chippewa Indians
14
TMBCI personnel provided purchase orders to support the amount of
$
but did not provide detailed invoices to support the
cumulative expenditure amount. Without these detailed invoices, we were
unable to determine that all expenditures were properly reported in the
appropriate obligation category at the correct amount. Further, the
unsupported cumulative expenditure amount of $
reported
within GrantSolutions exceeded the $
total obligation amount
authorized within TMBCI's most recent resolution as of the Cycle 531
reporting deadline of June 30, 2021. Without the expenditure supporting
documentation, Castro was unable to determine that these expenses were
substantially dedicated to mitigating or responding to the COVID-19 public
health emergency. Therefore, Castro was unable to conclude on whether
the expenditures met the eligibility requirements.
TMBCI personnel stated that the relationship with the vendor was for the
delivery of gravel for road access from remote homes. At the
commencement of the contract, it was not known how much gravel would
be needed. The vendor delivered the goods and TMBCI was billed, and the
expenditures were paid. TMBCI personnel stated that the Cycle 532
progress report was hastily prepared with inadequate access to
information. TMBCI personnel were unable to locate the contract. TMBCI
personnel confirmed that they would make the correction to the reported
obligation amount within GrantSolutions to future cycles.
TMBCI personnel did not provide sufficient documentation to support the
payment dates of the expenditure. TMBCI personnel confirmed that these
checks were not readily accessible to the Tribe. Total questioned
expenditures amounted to $
Contract No.
(Transaction No. 5):
The purpose of Contract No.
was to purchase computers and a
charging cart for elementary school students. TMBCI was able to support
the expenditure dates were within the period of performance; however,
TMBCI personnel did not provide sufficient documentation to support the
payment dates to the contractor as reported within GrantSolutions. This
did not result in questioned costs as the expenditure amount of $
fell within the period of performance of the CARES Act. TMBCI personnel
confirmed the root cause of the missing support was that these checks
were not readily accessible to the Tribe.
31 Calendar quarter ending June 30, 2021.
32 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
15
Grants greater than or equal to $50,000
TMBCI’s Grants greater than or equal to $50,000 were not in compliance with the
CARES Act and Treasury’s Guidance. We were unable to determine if TMBCI met
the eligibility requirements for the selected transaction due to the lack of
supporting documentation. We selected one transaction and requested
documents to include, but not limited to, the grant agreement, purchase orders,
application and certificates for payment, invoices, sub-recipient monitoring
reports, payment requests, quotations, and proof of payment. Due to the
inadequate support, we determined that selecting additional transactions would
not make sense. We identified an exception within the one transaction selected for
testing as detailed below:
Grant No.
(Transaction No. 1):
The purpose of Grant No.
was to
. TMBCI personnel provided purchase
orders in support of cumulative expenditures of $1,550,744.78 made under
the grant, which reconciled to GrantSolutions. TMBCI personnel only
provided detailed invoices for $
of the expenditures resulting in
unsupported questioned expenditures in the amount of $
Although TMBCI personnel provided cancelled checks totaling the amount
reported in GrantSolutions, without the detailed invoices we were unable
to verify that the payments made to the sub-recipient were expenses
incurred within the period of the grant agreement.
TMBCI personnel noted that this project was managed by an engineering
firm; therefore, documentation was not readily available to TMBCI
personnel other than what was provided to it through its sub-recipient
monitoring efforts.
Transfers to Other Government Entities greater than or equal to $50,000
TMBCI’s Transfers to Other Government Entities greater than or equal to $50,000
were not in compliance with the CARES Act and Treasury’s Guidance. We were
unable to determine if TMBCI met the eligibility requirements for the selected
transaction due to the lack of supporting documentation. We selected one
transaction and requested documents to include, but not limited to, tribal
resolutions, sub-recipient monitoring forms, wire transfer support, and project
budget statements. Due to the inadequate support provided, we determined that
selecting additional transactions would not make sense. We noted the following
exceptions with the one transaction selected for testing as detailed below:
Desk Review of the Turtle Mountain Band of Chippewa Indians
16
Transfer No.
(Transaction No. 1):
Castro reviewed the Cycle 533 FPR and noted that TMBCI personnel
reported $0 of cumulative expenditures incurred using transferred funds.
The sub-recipient monitoring form, as of December 14, 2020, indicated that
total expenditures made to date were $
. TMBCI personnel did
not provide any detailed invoices to corroborate the cumulative
expenditure amount that should have been recorded in GrantSolutions.
Since TMBCI personnel did not provide us with detailed invoices needed to
make a full assessment, we were unable to determine the correct amount
of cumulative expenditures that should have been reported.
TMBCI personnel confirmed that the Tribe made additional expenditures beyond
the sub-recipient agreement for things like
. TMBCI
personnel confirmed that the Cycle 534 report was prepared in haste without
access to the accounting software and the preparer committed an error in
reporting this amount. TMBCI personnel confirmed that they would make the
correction to future cycles. We are not questioning any costs because no
expenditures were recorded in GrantSolutions as of Cycle 5.35
Direct Payments greater than or equal to $50,000
TMBCI’s Direct Payments greater than or equal to $50,000 were not in compliance
with the CARES Act and Treasury’s Guidance. We were unable to determine if
TMBCI met the eligibility requirement for four of the seven transactions selected
for testing due to the lack of supporting documentation. We selected seven
transactions and requested documents to include, but not limited to, invoices,
purchase orders, contracts, application and certificates for payment requests, and
proof of payment. Due to the inadequate support provided by TMBCI personnel,
we determined that selecting additional transactions would not make sense. We
identified exceptions with all seven transactions selected for testing as detailed
below:
We reviewed the contractor's application for payment documents provided to
support the Direct Payments greater than or equal to $50,000 entries and
noted that they appeared to be related to contracts for six of seven
transactions. Of these, TMBCI personnel did not provide any contracts for our
review for transaction numbers 1, 2, 3, 4, 6, and 7. Since TMBCI personnel did
not provide us sufficient support, we were unable to determine if this
obligation was classified correctly. TMBCI personnel confirmed that the
cumulative expenditure amount for transactions 1, 2, 3, 4, 6, and 7 of
$
reported in GrantSolutions is erroneously misclassified within
33 Calendar quarter ending June 30, 2021.
34 Calendar quarter ending June 30, 2021.
35 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
17
the Direct Payments greater than or equal to $50,000 category. TMBCI
personnel reported that the cumulative expenditures for transactions 1, 2, 3, 4,
6, and 7 of $
should have been recorded under the contract
obligation and expenditure type. Additionally, TMBCI personnel confirmed
that transaction number 1, of these misclassified entries was duplicated within
GrantSolutions and reported in both Direct Payments greater than or equal to
$50,000 and Aggregate Payments for Individuals.
Castro determined that amounts reported in GrantSolutions were overstated
by $
for Direct Payments greater than or equal to $50,000.
Additionally, this amount is reported as questioned costs. Further, the
Contracts greater than or equal to $50,000 obligation type was understated by
an indeterminate amount because TMBCI personnel did not provide all
documentation needed to make a full assessment on the correct entries to be
made in GrantSolutions. TMBCI personnel provided only high-level summary
information (such as the Application and Certificate for Payment), instead of
providing a contract and detailed invoices. Castro did not consider this to be
sufficient to support these expenditure amounts. Further, the Application and
Certificate for Payments cumulative amounts did not agree to the amount
reported in GrantSolutions. TMBCI personnel provided either no payment
support or partial payment support that did not consistently agree to the total
amount reported in GrantSolutions.
For four of seven transactions tested (transactions 1, 2, 6, and 7) Castro
requested additional support from TMBCI personnel to support the eligible
use for expenditures under the associated projects. Documentation was not
provided to support eligibility that these expenses were substantially
dedicated to mitigating or responding to the COVID-19 public health
emergency. Therefore, Castro was unable to conclude on whether the
expenditures met the eligibility requirements. The ineligible amount for
transactions 1, 2, 6, and 7 in the amount of $
was included in the
questioned costs above of $
therefore, there was no additional
questioned costs as a result of this issue.
Transaction No. 5:
The expenditure amount reported in GrantSolutions of $
varied
from the expenditure amount in the supporting documentation of
$
resulting in questioned expenditures of $
Without
the remainder of these invoices, we were unable to confirm the obligation
category and associated project for those related balances.
For Direct Payments greater than or equal to $50,000, TMBCI personnel told us
that they contracted an outside independent public accounting firm to prepare the
Desk Review of the Turtle Mountain Band of Chippewa Indians
18
GrantSolutions FPR and that the preparer had little knowledge of the process and
inadequate access to information needed to complete an accurate submission.
The preparer and legal counsel could only access spreadsheet documents rather
than a general ledger from the accounting software. TMBCI personnel stated that
the Tribe’s legal counsel deemed submission of the FPR imperative and confirmed
that they would make the correction to future cycles. Additionally, TMBCI
personnel confirmed that there was a lack of monitoring by the Tribe evidenced
by their lack of source documentation available.
Based on the issues noted above, we determined that TMBCI was noncompliant
with Treasury OIG Guidance OIG-CA-20-021.
Aggregate Reporting less than $50,000
TMBCI’s Aggregate Reporting less than $50,000 was not in compliance with the
CARES Act and Treasury’s Guidance. We were unable to determine if TMBCI met
the eligibility requirements for the selected transactions due to the lack of
supporting documentation. We selected three transactions and requested
documents to include, but not limited to, purchase orders, payment requests,
application and certificates for payment, invoices, and sub-recipient monitoring
forms. Due to the inadequate support provided by TMBCI personnel, we
determined that selecting additional transactions would not make sense. During
our review of Aggregate Reporting, we noted exceptions in all three transactions
tested.
Transaction No. 1:
For one of three transactions tested, obligations exceeded $50,000. TMBCI
misclassified these obligations and expenditures within GrantSolutions,
causing Aggregate Reporting less than $50,000 to be overstated by
$
TMBCI personnel did not provide sufficient support to make
an assessment as to the correct obligation and expenditure type or amount
of the correct entry to be made within GrantSolutions. This resulted in total
questioned costs of $
Transactions Nos. 2 and 3:
For two of three transactions tested, these obligations exceeded $50,000.
Therefore, TMBCI personnel misclassified these obligations within
GrantSolutions, causing Aggregate Reporting less than $50,000 to be
overstated by $
These transactions were also included as
duplicate entries within the Direct Payment greater than or equal to
$50,000, and instead should have been reported within the Contracts
greater than or equal to $50,000.
Desk Review of the Turtle Mountain Band of Chippewa Indians
19
TMBCI personnel did not provide documentation needed for us to make a
full assessment on the correct entries to be made to reclassify these
obligations. TMBCI personnel did not provide any contracts for our review.
TMBCI personnel provided high-level summary information, including
Application and Certificate for Payment, which agreed to the amount
reported. However, we did not consider this to be sufficient to support
these expenditure amounts or to support eligibility as TMBCI personnel did
not provide any detailed invoices to support the expenditures. As a result,
this resulted in total questioned costs of $
For Aggregate Reporting less than $50,000, TMBCI personnel confirmed that the
Cycle 536 report was prepared in haste without access to the accounting software
and the preparer committed an error when reporting this as an expenditure of less
than $50,000. TMBCI personnel noted that these transactions were inappropriately
stated as a building purchase when in fact it was for infrastructure development of
a road to some quarantine isolation residences. TMBCI personnel confirmed that
these transactions should have been reported as Contracts greater than or equal
to $50,000. Further, TMBCI personnel were unable to provide adequate
documentation to support the expenditures which they confirmed was due to a
lack of support from an architecture firm contracted to review the payments
requests. The architecture firm acted as the Tribe's representative. Such records
were maintained by an architecture firm to support the expenditures, along with
the pay requests provided with the Purchase Orders. TMBCI personnel confirmed
that they would make the correction to future reporting cycles. As a result, this
resulted in total questioned costs of $
Based on the issues noted above, we determined that TMBCI was noncompliant
with Treasury OIG Guidance OIG-CA-20-021.
Aggregate Payments to Individuals
TMBCI’s Aggregate Payments to Individuals were not in compliance with the
CARES Act and Treasury’s Guidance. We were unable to determine if TMBCI met
the eligibility requirements for all three of the transactions selected due to a lack
of supporting documentation. We selected three transactions and requested
documents to include, but not limited to, contracts, purchase orders, payment
requests, application and certificates for payment, invoices, sub-recipient
monitoring forms, and proof of payments. During our review of Aggregate
Payments to Individuals, we identified exceptions within all three transactions
selected for testing as detailed below:
36 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
20
Transaction Nos. 1 and 3:
We reviewed the cancelled checks and contractor's applications for
payment provided to support the Aggregate Payment to Individuals entries
for two of three transactions. We noted that these payments, totalling
$
were both duplicated and misclassified within
GrantSolutions. TMBCI personnel indicated that this $
cumulative expenditure amount should have been recorded under the
Contract greater than or equal to $50,000 obligation type.
We determined that amounts reported in GrantSolutions were overstated
by $
because of known errors related to inclusion of duplicated
costs and Contracts greater than or equal to $50,000 were understated by
an indeterminate amount because TMBCI personnel did not provide
documentation needed to make a full assessment. Specifically, TMBCI
personnel provided only high-level summary information instead of
providing a contract and detailed invoices. We did not consider this to be
sufficient to support these expenditure amounts. As a result, this resulted
in total questioned costs of $
Transaction No. 2:
We reviewed the contractor's applications and cancelled checks provided.
We noted that these payments related to a contract for emergency
response. TMBCI personnel confirmed that this entry was duplicated and
misclassified within GrantSolutions. Additionally, TMBCI personnel told us
that this $
cumulative expenditure amount should have been
recorded under the Contracts greater than or equal to $50,000 obligation
type.
We determined that amounts reported in GrantSolutions were overstated
by $
for both Direct Payments greater than or equal to $50,000
and Aggregate Payments to Individuals. Further, the Contracts greater than
or equal to $50,000 obligation type was understated by an indeterminate
amount because TMBCI personnel did not provide documentation for us to
make a full assessment. Specifically, TMBCI personnel provided only high-
level summary information instead of providing a contract and detailed
invoices. We did not consider this to be sufficient to support these
expenditure amounts. As a result, this resulted in total questioned costs of
$
For all three transactions tested, TMBCI personnel were unable to provide
support that these expenses were substantially dedicated to mitigating or
responding to the COVID-19 public health emergency. Therefore, Castro was
unable to conclude on whether the expenditures met the eligibility
Desk Review of the Turtle Mountain Band of Chippewa Indians
21
requirements.
For Aggregate Payments to Individuals, TMBCI personnel confirmed that the
Cycle 537 report was prepared in a rush and TMBCI CARES program personnel
failed to perform the required reporting duties in the GrantSolutions portal. As a
result, the TMBCI legal counsel requested the assistance of an independent public
accounting firm to assist in completing the information in GrantSolutions. The
accounting firm worked with a spreadsheet rather than its accounting software.
This resulted in errors because of the lack of access to the appropriate
information. TMBCI did not have accounting professionals to assist with reporting,
which created issues with various reporting requirements. Additionally, TMBCI
personnel confirmed that these transactions should have been reported as
Contracts greater than or equal to $50,000. TMBCI personnel confirmed that they
would make the correction in future GrantSolutions reporting cycles. As a result,
Castro reported total questioned costs of $
for Aggregate Payments to
Individuals. Based on the issues noted above, we determined that TMBCI was
noncompliant with Treasury OIG Guidance OIG-CA-20-021.
Conclusion
We determined that the expenditures related to all payment types reviewed did
not comply with the CARES Act and Treasury Guidance resulting in total
questioned costs of $32,333,620.36. Therefore, we determined TMBCI’s risk of
unallowable use of funds to be high. As such, Castro is recommending that
Treasury OIG pursue obtaining supporting documentation from TMBCI personnel
and ensure reporting corrections are made. Further, based on TMBCI’s
responsiveness to Treasury OIG’s requests and its ability to provide
documentation, we recommend Treasury OIG determine if a full-scope audit is
feasible.
Additionally, we reviewed certain complaint allegations received by OIG. We
found that expenditures related to the allegations reported in GrantSolutions of
$
were unsupported due to a lack of documentation. Of the
questioned amount, $7,508,564.41 was included in our original transactions
selected for testing as summarized in the Summary of Expenditure Testing,
Cumulative Expenditure Tested Amount column above and we consider
$
of this amount to be untested. We recommend that Treasury OIG
follow-up with TMBCI personnel to obtain sufficient support to quantify
expenditures related to these allegations and determine whether the amounts
represent eligible CRF costs.
37 Calendar quarter ending June 30, 2021.
Desk Review of the Turtle Mountain Band of Chippewa Indians
22
*****
All work completed with this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.38 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
38 https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf