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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220
OFFICE OF
INSPECTOR GENERAL
December 19, 2024
MEMORANDUM FOR JESSICA MILANO, CHIEF PROGRAM OFFICER, OFFICE OF
CAPITAL ACCESS, DEPARTMENT OF THE TREASURY
FROM: Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT: Desk Review of the Native Village of Selawik’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-25-027)
Please find the attached desk review memorandum 1 on the Native Village of
Selawik’s (Selawik) use of Coronavirus Relief Fund (CRF) proceeds. The CRF is
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).
Under a contract monitored by our office, Castro & Company, LLC (Castro), a
certified independent public accounting firm, performed the desk review. Castro
performed the desk review in accordance with the Council of the Inspectors
General on Integrity and Efficiency Quality Standards for Federal Offices of
Inspector General standards of independence, due professional care, and quality
assurance.
In its desk review, Castro personnel reviewed documentation for a non-statistical
selection of 20 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified unsupported and ineligible questioned costs of $70,486 and
$1,106,212, respectively, resulting in total questioned costs of $1,176,698 (see
attached scheduled of monetary benefits).
1
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) assigned the Department of
the Treasury Office of Inspector General with responsibility for compliance monitoring and
oversight of the receipt, disbursement, and use of Coronavirus Relief Fund (CRF) payments. The
purpose of the desk review is to perform monitoring procedures of the prime recipient’s receipt,
disbursement, and use of CRF proceeds as reported in the grant-reporting portal on a quarterly
basis.
Page 2
Castro determined that the expenditures related to Direct Payments greater than
or equal to $50,000, Aggregate Reporting less than $50,000, 2 and Aggregate
Payments to Individuals 3 did not comply with the CARES Act and the Department
of the Treasury’s (Treasury) Guidance. Castro identified reporting classification
errors within the Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Reporting to Individuals payment
types that did not comply with Treasury’s Guidance. Additionally, Castro
determined that Selawik’s risk of unallowable use of funds is high.
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with
Selawik’s management to confirm the transactions noted as unsupported or
ineligible expenditures within the Direct Payments greater than or equal to
$50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to
Individuals payment types are recouped or replaced by other eligible expenditures
not previously charged to CRF, that were incurred during the period of
performance. Based on Selawik’s responsiveness to Treasury OIG’s requests and
management’s ability to provide sufficient documentation, Castro recommends
that Treasury OIG determine the feasibility of conducting an audit for the Direct
Payments greater than or equal to $50,000, Aggregate Reporting less than
$50,000, and Aggregate Payments to Individuals payment types.
Castro also identified other matters throughout the course of the desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG follow-up on these issues:
1) Based on the results of Castro’s testing over $23,414 out of $857,576 in CRF
payroll expenses claimed by Selawik, Castro recommends Treasury OIG
determine the feasibility of following up on the balance of $834,162, as the
remaining balance may be similarly unsupported or ineligible since Castro found
exceptions related to all payroll transactions tested;
2) Follow-up with Selawik to determine if there were additional costs, separate
from those tested by Castro, claimed within the Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types related to the construction of its “new
store”, and if so, determine if those amounts should be questioned as well; and
2 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
grant-reporting 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).
3
Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grant-reporting portal to prevent inappropriate
disclosure of personally identifiable information.
Page 3
3) Since there were hardship payments misclassified in the Direct Payments
greater than or equal to $50,000 payment type that should have been reported in
the Aggregate Payments to Individuals payment type identified within the testing,
Castro recommends Treasury OIG follow-up with Selawik to determine if there
were additional costs claimed within the Direct Payments greater than or equal to
$50,000 and Aggregate Payments to Individuals payment types related to
hardship payment claims, and if so, determine if those amounts should be
questioned as well.
Treasury OIG issued a draft of this report to Selawik on December 11, 2024 and
notified the tribe that Castro personnel would reach out to schedule an exit
conference. Selawik management acknowledged receipt of the draft report on
December 11, 2024, but did not respond to multiple subsequent requests to
schedule an exit conference. Treasury OIG will contact Selawik to follow-up on the
questioned costs in this desk review in 2025.
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 the Selawik’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 Inspectors
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, Audit Director, at (202) 487-8371.
cc:
Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Danielle Christensen, Chief Compliance & Finance Officer, Office of Capital
Access, Department of the Treasury
Wayne Ference, Partner, Castro & Company, LLC
Tanya Ballot, Tribal Administrator, Native Village of Selawik
Page 4
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations, 4 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). 5 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.
Recommendation Questioned Costs
Recommendation No. 1 $1,176,698
The questioned costs represent amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $1,176,698 is
Selawik’s total expenditures reported in the grant-reporting portal that were
ineligible or lacked supporting documentation.
4
2 CFR § 200.84 – Questioned Cost
5
JAMES is Treasury’s audit recommendation tracking system.
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
Desk Review of the Native Village of Selawik, Alaska
December 19, 2024
OIG-CA-25-027
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the Native Village of Selawik, Alaska
On September 11, 2023, we initiated a desk review of the Native Village of
Selawik’s (Selawik) 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 Selawik’s documentation supporting its uses of
CRF proceeds as reported in the GrantSolutions 2 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, 2023, 3 as
reported in the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Selawik’s quarterly Financial Progress Reports (FPRs) submitted
in the GrantSolutions portal through June 30, 2023;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021; 4
1
P.L. 116-136 (March 27, 2020).
2
GrantSolutions, a grant and program management Federal shared service provider under the
United States (U.S.) Department of Health and Human Services, developed a customized and user-
friendly reporting solution to capture the use of CRF payments from prime recipients.
3
Selawik fully expended their total CRF proceeds as of June 30, 2023. Castro set the scope end
date to June 30, 2023, which was the date of Selawik’s last reporting submission within the
GrantSolutions portal.
4
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
1
Desk Review of the Native Village of Selawik, Alaska
3) reviewed Treasury Office of Inspector General’s (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping; 5
4) reviewed Treasury OIG’s monitoring checklists 6 of Selawik’s quarterly FPR
submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit Act reports, 7 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 Selawik’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations, the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee, 8 and Treasury OIG Office of Counsel input on
issues that may pose risk or impact Selawik’s uses of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Selawik’s GrantSolutions portal quarterly FPR submissions, as well as
officials responsible for obligating and expending CRF proceeds;
8) made a non-statistical selection of Direct Payments, Aggregate Reporting
less than $50,000, 9 and Aggregate Payments to Individuals10 data identified
through GrantSolutions portal reporting; and
5
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.
6
The checklists were used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews were
designed to identify material omissions and significant errors, and where necessary, included
procedures for notifying prime recipients of misreported data for timely correction. Treasury OIG
followed the CRF Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review
Procedures Guide, OIG-CA-20-029R to monitor the prime recipients on a quarterly basis.
7
The Single Audit Act of 1984, as amended in 1996, subject entities who receive federal funds in
excess of $750,000 to one audit of those federal funds as opposed to separate audits over each of
the Federal program funding sources received. This Act was enacted for the purpose of promoting
sound financial management, including effective internal controls, with respect to Federal awards
administered by non-Federal entities and to establish uniform requirements for audits of Federal
awards administered by non-Federal entities. This prime recipient was subject to those audit
requirements, and Castro reviewed applicable prior year single audit reports as part of our desk
review risk assessment procedures.
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 15 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
Prime recipients were required to report CRF transactions greater than or equal to $50,000 in
detail in the GrantSolutions portal. Transactions less than $50,000 could be reported as an
aggregate lump-sum amount by type (contracts, grants, loans, direct payments, and transfers to
other government entities).
10
Obligations and expenditures for payments made to individuals, regardless of amount, were
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.
2
Desk Review of the Native Village of Selawik, Alaska
9) evaluated documentation and records used to support Selawik’s quarterly
FPRs.
Based on our review of Selawik’s documentation supporting the uses of its CRF
proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Direct Payments greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals
payment types did not comply with the CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $70,486 and
$226,470, respectively, with total tested questioned costs across all payment types
of $296,956. In addition to the detailed transactions tested, Castro identified other
matters that related to the construction of a store that we considered to be
ineligible because Selawik began construction of this store prior to the start of the
COVID-19 pandemic. This resulted in ineligible questioned costs of $879,742,
increasing our total questioned costs from $296,956 to $1,176,698. We also
determined Selawik’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG confirm the transactions noted as
unsupported or ineligible expenditures within the Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types are recouped or replaced by other eligible
expenditures, not previously charged to CRF, that were incurred during the period
of performance. Based on Selawik’s responsiveness to Treasury OIG’s requests
and its ability to provide sufficient documentation, we recommend Treasury OIG
determine the feasibility of conducting an audit for the Direct Payments greater
than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types.
3
Desk Review of the Native Village of Selawik, Alaska
Non-Statistical Transaction Selection Methodology
Treasury issued a $2,568,863 CRF payment to Selawik. As of June 30, 2023,
Selawik expended all of its CRF funds. Selawik’s cumulative obligations and
expenditures by payment type are summarized below.
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ - $ -
Grants >= $50,000 $ - $ -
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ - $ -
Direct Payments >= $50,000 $ 649,918 $ 649,918
Aggregate Reporting < $50,000 $ - $ -
Aggregate Payments to Individuals
(in any amount) $ 1,918,945 $ 1,918,945
Totals $ 2,568,863 $ 2,568,863
Population Reconciling and Financial Reporting Control Issues
Castro’s review of Selawik’s GrantSolutions portal reported expenditures as of
June 30, 2023 as compared to the underlying general ledger (GL) detail resulted in
the identification of a significant amount of reconciling reporting errors that
Castro deemed to be misclassifications that did not comply with Treasury’s
Guidance. Selawik stated that due to the complexity of the GrantSolutions
reporting portal, the initial reports were not filed correctly due to technical
difficulty and that the individual reporting on the CARES Act funds struggled with
the reporting until they contracted an accountant to fix it.
For instance, Selawik decreased the Aggregate Payments to Individuals payment
type due to a misclassification of $517,578 and moved $29,900 of those funds to
the Direct Payments greater than or equal to $50,000 payment type, and $487,678
of those funds to the Aggregate Reporting less than $50,000 payment type.
Selawik confirmed that it made these reporting corrections within its
September 30, 2023 GrantSolutions portal submission due to reporting
misclassifications brought to their attention by Castro. Castro obtained and
reviewed the September 30, 2023 GrantSolutions portal FPR submission provided
by Selawik and confirmed these updates were made; however, these changes
occurred due to errors identified by Castro as a result of our desk review and
therefore we did not extend our scope end date of June 30, 2023. Castro noted
that these changes did not result in a change to the total expenditures claimed.
See below for a summary of these classification changes made by Selawik.
4
Desk Review of the Native Village of Selawik, Alaska
Cumulative
Cumulative Expenditures
Expenditures Per GL Detail
Payment Type per FPR Population Difference
Contracts >= $50,000 $ - $ - $ -
Grants >= $50,000 $ - $ - $ -
Loans >= $50,000 $ - $ - $ -
Transfers >= $50,000 $ - $ - $ -
Direct Payments >= $50,000 $ 649,918 $ 679,818 $ 29,900
Aggregate Reporting < $50,000 $ - $ 487,678 $ 487,678
Aggregate Payments to
Individuals (in any amount) $ 1,918,945 $ 1,401,367 $ (517,578)
Totals $ 2,568,863 $ 2,568,863
Castro made a non-statistical selection of Direct Payments greater than or equal to
$50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to
Individuals. Selections were made using auditor judgment based on information
and risks identified in reviewing audit reports, the GrantSolutions portal reporting
anomalies 11 identified by the Treasury OIG CRF monitoring team, and review of
Selawik’s FPR submissions. Castro noted Selawik did not obligate or expend CRF
proceeds to the Contracts greater than or equal to $50,000, Grants greater than or
equal to $50,000, Loans greater than or equal to $50,000, and Transfers 12 greater
than or equal to $50,000 payment types; therefore, we did not make a selection of
transactions from these payment types.
The number of transactions (20) we selected to test was based on Selawik’s total
CRF award amount and Castro’s overall risk assessment of Selawik. To allocate
the number of transactions (20) by payment type (Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals), we compared the payment type dollar amounts as a
percentage of cumulative expenditures as of June 30, 2023. The transactions
selected for testing were not selected statistically, and therefore results could not
be extrapolated to the total universe of transactions.
Background
The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States and certain local
governments; the District of Columbia and U.S. Territories, including the
11
Treasury OIG had a pre-defined list of risk indicators that were triggered based on data
submitted by prime recipients in the FPR submissions that met certain criteria. Castro reviewed
these results provided by Treasury OIG for the prime recipient.
12
A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
5
Desk Review of the Native Village of Selawik, Alaska
Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Islands; and Tribal governments
(collectively referred to as “prime recipients”). Treasury issued a $2,568,863 CRF
payment to Selawik. The CARES Act stipulates that a prime recipient may only use
the funds to cover costs that—
(1) were 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 during the covered period between March 1, 2020 and
December 31, 2022. 13
Section 15011 of the CARES Act required each covered recipient 14 to submit to
Treasury and the Pandemic Response Accountability Committee, no later than 10
days after the end of each calendar quarter, a report that contained (1) the total
amount of large, covered funds 15,16 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)).
13
P.L. 116-260 (December 27, 2020). The covered period end date of the CRF was extended through
December 31, 2021 by the Consolidated Appropriations Act, 2021. The covered period 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, P.L. 117-328, December 29, 2022, 136 Stat. 4459.
14
Section 15011 of P.L. 116-136 defined a covered recipient as any entity that received large,
covered funds and included any State, the District of Columbia, and any territory or possession of
the United States.
15
Section 15010 of P.L. 116-136 defined covered funds as any funds, including loans, that were
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 made appropriations for
Coronavirus response and related activities.
16
Section 15011 of P.L. 116-136 defined large, covered funds as covered funds that amounted to
more than $150,000.
6
Desk Review of the Native Village of Selawik, Alaska
Desk Review Results
Financial Progress Reports
We reviewed Selawik’s quarterly FPRs through June 30, 2023, and found that
Selawik timely filed quarterly FPRs in the GrantSolutions portal in compliance
with Treasury OIG’s reporting requirements for the periods ending June 30, 2020
through September 30, 2020, the period ending December 31, 2022, and the
period ending June 30, 2023.
Selawik did not prepare FPR submissions in the GrantSolutions portal for periods
ending December 31, 2020 through September 30, 2022, and for the period ending
March 31, 2023. We determined Selawik was non-compliant with Treasury OIG’s
reporting requirements for those periods.
Summary of Testing Results
We found that the Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types did not comply with the CARES Act and Treasury’s Guidance because we
were unable to determine if all tested expenditures were necessary 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 could not be extrapolated to the total universe of transactions.
Within Table 1 below, we have included a summary of $296,956 in unsupported
and ineligible expenditures identified as questioned costs through our testing of
detailed transactions, which did not comply with the CARES Act and Treasury’s
Guidance. Castro also identified other matters throughout the course of our desk
review procedures which we considered to be questioned costs that were not part
of our testing of detailed transactions. Table 2 below combines the questioned
costs identified in Table 1 with the other questioned costs of $879,742 identified
separately from our detailed transaction testing to account for total questioned
costs of $1,176,698. See the Desk Review Results section below Table 2 for a
detailed discussion of questioned costs and other issues identified throughout the
course of our desk review.
7
Desk Review of the Native Village of Selawik, Alaska
Table 1 - Summary of Expenditures Testing and Recommended Results
As of September 30, 2023 17
Corrected GL Unsupported Ineligible
Detail Population Cumulative Tested Tested
Expenditure Expenditure Questioned Questioned Total Tested
Payment Type Amount Tested Amount Costs Costs Questioned Costs
Contracts >=
$50,000 $ - $ - $ - $ - $ -
Grants >= $50,000 $ - $ - $ - $ - $ -
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >=
$50,000 $ - $ - $ - $ - $ -
Direct Payments
>= $50,000 $ 679,818 $ 229,679 $ 14,799 $ 201,718 $ 216,517
Aggregate
Reporting <
$50,000 $ 487,678 $ 61,737 $ 36,333 $ 15,188 $ 51,521
Aggregate
Payments to
Individuals (in any
amount) $ 1,401,367 $ 28,918 $ 19,354 $ 9,564 $ 28,918
Totals $ 2,568,863 $ 320,334 $ 70,486 $ 226,470 $ 296,956
17
As discussed earlier in this report, Castro’s review of Selawik’s underlying general ledger (GL)
detail resulted in identification of reconciling reporting errors that Castro deemed to be
misclassifications that did not comply with Treasury’s Guidance. Although Castro kept the scope
end date as June 30, 2023, we utilized the September 30, 2023 GrantSolutions portal submission
adjusted figures for our transaction selections for testing. See Population Reconciling and
Financial Reporting Controls Issues within Desk Review Results section for a summary of these
classification changes made by Selawik.
8
Desk Review of the Native Village of Selawik, Alaska
Table 2 – Summary of Expenditures Tested and Other Matters and Recommended Results
As of September 30, 2023
(B) (C=A+B) (E) (F=D+E)
(A) Unsupported Total (D) Ineligible Total
Unsupported Questioned Unsupported Ineligible Questioned Ineligible (G=C+F)
Questioned Costs (Other Questioned Questioned Costs (Other Questioned Total
Payment Type Costs (Tested) Matters) Costs Costs (Tested) Matters) 18 Costs Questioned Costs
Contracts >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Grants >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Loans >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Transfers >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Direct Payments >= $50,000 $ 14,799 $ - $ 14,799 $ 201,718 $ 302,213 $ 503,931 $ 518,730
Aggregate Reporting <
$50,000 $ 36,333 $ - $ 36,333 $ 15,188 $ 39,242 $ 54,430 $ 90,763
Aggregate Payments to
Individuals (in any amount) $ 19,354 $ - $ 19,354 $ 9,564 $ 538,287 $ 547,851 $ 567,205
Totals $ 70,486 $ - $ 70,486 $ 226,470 $ 879,742 $ 1,106,212 $ 1,176,698
18
Castro combined all other matters related to hardship payments and the “new store” other matter ineligible questioned costs. The
Direct Payments greater than or equal to $50,000 payment type ineligible questioned costs of $302,213 consisted of ineligible “new
store” costs of $106,613 and ineligible hardship payments of $195,600. The Aggregate Payments to Individuals payment type ineligible
questioned costs of $538,287 consisted of ineligible “new store” costs of $33,939 and ineligible hardship payments of $504,348.
9
Desk Review of the Native Village of Selawik, Alaska
Selawik Hardship Payment Program Summary
Selawik set up two types of hardship payment 19 programs. The first hardship
payment program was a one-time $350 payment to all tribal citizens. The second
hardship payment program was created to assist tribal citizens with past due
utilities. Selawik stated that for the one-time $350 hardship payment, tribal
citizens were not required to submit completed applications, however, for the past
due utility assistance payment, tribal citizens were required to submit completed
applications. These applications were reviewed and approved internally before
payment was sent directly to the utility vendor as opposed to the hardship
recipient. Selawik classified transactions related to the one-time $350 payment to
all tribal citizens and transactions related to their hardship payment for utility
assistance in the Aggregate Payments to Individuals payment type; however, as a
result of our testing, we determined that Selawik also misclassified additional
utility hardship payments within the Direct Payments greater than or equal to
$50,000 payment type. Castro identified issues related to those hardship
payments within both payment types, as detailed below.
Selawik provided Castro the total Selawik tribal citizen population count of 1,248
as of 2020, and we performed analytical procedures to determine the
reasonableness of Selawik’s hardship payments claimed in its corrected
September 30, 2023 GrantSolutions portal submission.
19
Castro tested transactions related to tribal citizen hardship payment assistance, which was a
payment made by a government to citizens who have experienced a hardship due to the
pandemic.
10
Desk Review of the Native Village of Selawik, Alaska
Table 3 below includes a summary of Selawik’s actual CRF hardship payment
program claims that were reported in the Aggregate Payments to Individuals
payment type:
Table 3 - Summary of Selawik’s Actual CRF Hardship Payment Program Claims
Questioned
Questioned Costs
CRF Questioned Costs (Combined
Tribal Claimed Costs (Other Tested and
Hardship Additional Citizens Amount (Tested) Matter) Other Matter)
Program Description Paid (A) 20 (B) (C = A–B) (D=B+C)
$350 Increments Only
Hardship Payments
593 $ 207,550 $ - $ 207,550 $ 207,550
$350
Multiples of $350
One-Time
Hardship Payments to
Hardship
include children and
Payments
dependents ($700,
$1050 through $3,500)
701 21 $ 245,350 $ 3,500 $ 241,850 $ 245,350
Utilities Utilities Hardship
Hardship Payments in multiple
Payments different dollar values 229 $ 56,952 $ 2,004 $ 54,948 $ 56,952
Total Hardship Payments 1,523 $ 509,852 $ 5,504 $ 504,348 $ 509,852
20
Selawik claimed these CRF payments in the Aggregate Payments to Individuals payment type.
21
This included 221 payments that included multiples of $350 hardship payments to include
children and dependents. Since payment amounts were multiples of $350, Castro divided $245,350
by $350 to determine that these 221 payments were paid on behalf of 701 tribal citizens (parent,
children, and dependents).
11
Desk Review of the Native Village of Selawik, Alaska
Hardship Analysis Results: $350 One-Time Hardship Payments - Aggregate
Payments to Individuals
Castro determined that Selawik made COVID-19 hardship payments (both $350
one-time hardship payments and other increments of $350 one-time hardship
payments) to almost all of the population of the 2020 total tribal citizen population
of 1,248. Additionally, Selawik did not require the submission of any hardship
applications to assess the need of each tribal citizen. Castro determined Selawik
was non-compliant with the Treasury’s Guidance 22 because Selawik made
payments to almost all of its population in the form of a per capita payment to
residents without an assessment of individual need, which was required by
Treasury’s Guidance. Castro questioned the $452,900 in hardship payments as
ineligible, which consisted of $207,550 in hardship payments for exactly $350
each, and $245,350 in hardship payments for increments of $350. This consisted
of $3,500 in unsupported costs that we questioned as a result of our detailed
transaction testing. We excluded this amount and questioned the remaining
$449,400 as other identified ineligible questioned costs identified separate from
our detailed transaction testing. (See Table 3 above for calculations).
Castro determined the 229 utilities hardship payments included in the Aggregate
Payments to Individuals payment type were not paid to all tribal citizens. No
exception was noted due to our hardship analytic, as this payment amount did not
represent a per capita payment to 100 percent of Selawik’s tribal citizens.
22
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf.
Federal Register Notice Volume 86, Number 10 FAQ#4322 for the CRF, Treasury’s Guidance,
published January 15, 2021, Necessary Expenditures Incurred Due to the Public Health Emergency,
“Must a State, local, or tribal government require applications to be submitted by businesses or
individuals before providing assistance using payments from the Fund? Governments have
discretion to determine how to tailor assistance programs they establish in response to the
COVID–19 public health emergency. However, such a program should be structured in such a
manner as will ensure that such assistance is determined to be necessary in response to the
COVID–19 public health emergency and otherwise satisfies the requirements of the CARES Act and
other applicable law. For example, a per capita payment to residents of a particular jurisdiction
without an assessment of individual need would not be an appropriate use of payments from the
Fund.”
12
Desk Review of the Native Village of Selawik, Alaska
However, as a result of testing, Castro determined Selawik made utility hardship
payments directly to vendors and to tribal owned utility companies (e.g., Alaska
Village Electric Coop (AVEC), a member-owned utility that was owned by the
members it served) without assessing tribal citizens’ needs. We determined that
Selawik did not provide any hardship applications or documentation of
assessment of individual need. Treasury’s Guidance did not allow utilizing CRF
proceeds to replace foregone utility fees or to use funds as a direct subsidy
payment to all utility account holders without an assessment of individual need. 23
Castro considered this to be expressly disallowed by the Federal Register and
considered the entire $56,952 balance of utility hardship payments to be an
exception. After excluding $2,004 in hardship payment costs already questioned
within the Aggregate Payments to Individuals payment type, Castro determined
the remaining $54,948 to be an exception. We question the remaining $54,948 as
other matter identified ineligible costs (See Table 3 above for calculations).
As a result of our testing, we determined that Selawik also misclassified additional
utility hardship payments within the Direct Payments greater than or equal to
$50,000 payment type that should have been included within the Aggregate
Payments to Individuals payment type. These misclassifications were non-
compliant with Treasury’s Guidance.
Castro identified ineligible other matter questioned costs related to hardship
payments totaling $699,948. The ineligible questioned costs consisted of the
following expenditures of $195,600 in the Direct Payments greater than or equal to
$50,000 payment type, and $504,348 in the Aggregate Payments to Individuals
payment type. Since there were hardship payments misclassified in the Direct
Payments greater than or equal to $50,000 payment type that should have been
reported in the Aggregate Payments to Individuals payment type identified within
the testing section below, Castro recommends Treasury OIG follow-up with
Selawik to determine if there were additional costs claimed within the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to Individuals
payment types related to its hardship payments claims, and if so, determine if
those amounts should be questioned as well.
23
Federal Register Notice Volume 86, Number 10, FAQ #27, states that: “May Fund payments be
used to replace foregone utility fees? If not, can Fund payments be used as a direct subsidy
payment to all utility account holders? Fund payments may not be used for government revenue
replacement, including the replacement of unpaid utility fees. Fund payments may be used for
subsidy payments to electricity account holders…. For example, if determined to be a necessary
expenditure, a government could provide grants to individuals facing economic hardship to allow
them to pay their utility fees and thereby continue to receive essential services.”
13
Desk Review of the Native Village of Selawik, Alaska
Direct Payments Greater Than or Equal to $50,000
We determined Selawik’s Direct Payments greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. Castro tested 20 invoice
level transactions totaling $229,679 that were related to three total direct
payments selections in the amount of $569,703. The direct payments tested
consisted of expenses for a community outreach project; a vehicle purchase from
an equipment company; and an illness prevention project paid to the City of
Selawik. Transactions tested also included transactions that Castro considered
hardship payments for the purpose of assisting those in need with their utility
payments. We identified exceptions related to 20 invoice level direct payment
selections totaling $216,517 out of $229,679 tested, which consisted of ineligible
and unsupported questioned costs of $201,718 and $14,799 respectively, as
detailed below.
Direct Payment Exception #1 – Expenses for a Community Outreach Project
Selawik claimed $251,674 in expenses for a community outreach project to the
Alaska Village Electrical Coop, Inc. (AVEC). We tested 12 transactions totaling
$39,151 related to this direct payment selection, and question the entire amount,
including a total of $24,574 as ineligible questioned costs, and $14,577 as
unsupported questioned costs, as detailed below.
For one transaction tested related to the AVEC totaling $9,500, Selawik indicated
that this payment was necessary to fix and maintain electrical lines to the only
store in the village that provided food and fuel to the village. During the COVID-19
pandemic, community members still needed household goods and groceries.
Castro reviewed meeting minutes from a January 30, 2023 meeting between
Treasury OIG and Selawik officials to discuss a complaint, which alleged that
Selawik misused CRF proceeds by building a store and not distributing CRF
proceeds as hardship payments to all tribal citizens. Selawik had begun store
construction efforts in 2006, but it took over a decade to complete construction
due to the lack of funds. Treasury OIG determined that Selawik’s use of CRF
proceeds to build a community grocery store was not an eligible use of CRF
proceeds considering that the construction of the store began in 2006 before the
start of the COVID-19 pandemic. As a result, the incurred expenditures related to
the construction of the store did not meet the CARES Act and Treasury’s Guidance
requirements because the construction was started outside the covered period,
and not related to the COVID-19 pandemic. We reviewed supporting
documentation provided by Selawik and determined the costs to be ineligible
because the transaction related to electrical line maintenance for the construction
of the store which began in 2006. Castro questions $9,500 as ineligible costs.
14
Desk Review of the Native Village of Selawik, Alaska
For one of the transactions related to AVEC totaling $7,221, Selawik indicated that
the utility assistance to the City of Selawik was necessary in response to the
pandemic because the City of Selawik owned the building that was used for
COVID-19 quarantine during the pandemic. Castro reviewed documentation
provided by Selawik and noted the City of Selawik was billing Selawik for utilities.
We were able to agree the amounts from the documentation to the expenditures
claimed in the GrantSolutions portal; however, Castro determined that the dates
of overdue balances were all prior to the start of the COVID-19 pandemic and
ranged from January 2001 through November 2019. Since the dates on the
documentation provided all preceded the start of the COVID-19 pandemic covered
period, Castro did not consider these expenditures to be necessary due to the
COVID-19 pandemic. Castro questions the $7,221 in expenditures as ineligible.
For five of the hardship payment transactions related to AVEC totaling $6,000,
Selawik indicated that due to high costs, and the level of poverty and job loss as a
result of the pandemic, the Tribal Council paid for tribal citizen utilities. Castro
reviewed the request for payment and cancelled checks provided and noted that
the description on the check stated it was for “Utilities: Gas and Electric for three
months (April/May/June 2020) for 168 homes that received $400/month totaling
$1,200 per household.” Selawik only provided one month of electrical bills for
each household, which we could not agree to the CRF claimed amount. The
electrical bills received also did not show that the accounts were past due, which
was needed to evidence that the hardship payment was necessary due to the
pandemic and that the expense related to a hardship that occurred within the
covered period.
Based on the results of Castro’s testing, Castro determined that Selawik made a
per capita payment to its tribal citizens and did not perform an individual
assessment of need. This was explicitly disallowed by the Federal Register.
Further, Selawik made utility hardship payments directly to vendors and to tribal
owned utility companies as opposed to directly to the hardship payment
recipients. See "Hardship Analysis Results: $350 One-Time Hardship Payments -
Aggregate Payments to Individuals” Other Matter section above for expanded
discussion, to include Federal Register guidance contemplated by Castro to make
this determination. Castro questions $6,000 as ineligible costs.
15
Desk Review of the Native Village of Selawik, Alaska
For four hardship payment transactions related to AVEC totaling $1,853, Selawik
indicated that utility assistance to tribal citizens was necessary in response to the
COVID-19 pandemic due to job loss and level of poverty, as well as to keep homes
clean and warm to prevent spread of the disease. Castro reviewed documentation,
which indicated Selawik recognized these balances as “old, old accounts.” We
also reviewed “Bad Debt, Write-off” statements with the balances of the
transaction amounts that indicated the due dates of past due bills were
May 8, 2009 and July 1, 2018. Castro also noted that all four of these transactions
were for the same meter number but were for four different utility customers.
Based on the information received, it appeared as though Selawik reviewed its
past due accounts receivable/bad debt write-offs and claimed these amounts as
CRF expenditures. We determined these expenditures were incurred prior to the
COVID-pandemic covered period and did not meet the CARES Act and Treasury’s
Guidance requirements. Castro questions $1,853 as ineligible costs.
For one hardship payment transaction related to AVEC totaling $14,577, Selawik
indicated that the utility assistance in response to the COVID-19 pandemic was
necessary due to increased job loss and the high cost of living and utilities in the
village. Gas and electricity were needed to keep homes warm and provide a water
source to prevent the spread of COVID-19. Castro reviewed the shutoff notices
provided and noted that Selawik did not provide the shut-off notices for all the
utility customers within this transaction. For those instances where Selawik did
provide shutoff statements with a name that agreed to the list of utility hardship
payments made, Castro noted that the amounts on the shutoff statements were all
less than the amount claimed for those utility customers. Castro reviewed the
shutoff notices provided and determined that past due amounts totaled to only
$6,616 of the total $14,577 expenditure amount claimed for this transaction,
leaving the remaining $7,961 in expenditures as unsupported questioned costs.
Castro requested Selawik provide additional shutoff documents that matched to
the names and amounts of the claimed costs. We also requested Selawik provide
the last billing statements showing when the balances in the shutoff statements
went overdue to support amounts in the shutoff statement, but Selawik did not
provide any responses to our requests. Selawik also did not provide any hardship
applications showing that the hardship recipient asserted their need for that
COVID-19 funding. Without the billing statements and hardship applications,
Castro could not determine whether the costs were incurred due to the COVID-19
pandemic or whether these costs were incurred prior to the start of the pandemic.
Castro questions the entire transaction balance of $14,577 as unsupported costs.
16
Desk Review of the Native Village of Selawik, Alaska
Direct Payment Exception #2 – Expenses for a Vehicle Purchase
Selawik claimed $150,000 in expenses for a vehicle purchase payment made to an
equipment company. Related to this purchase, Selawik indicated that the vehicle
was purchased to start and complete the dirt work on the new quarantine facility
construction for tribal citizens to quarantine away from their families. Selawik
stated that they already were suffering from a severe housing shortage. After
reviewing the email correspondence provided, Castro determined that the dates
on the support started on February 13, 2020 and were prior to the start of the
COVID-19 pandemic. Castro requested additional explanation regarding how
Selawik determined these costs were not already budgeted for in its most recent
budget prior to March 27, 2020; however, Selawik did not timely respond to our
requests. Since the dates on the email correspondence all preceded the start of
the COVID-19 pandemic, Castro did not consider these expenditures to be
necessary due to the COVID-19 pandemic. We determined the costs were
obligated prior to the start of the covered period and Castro questions $150,000 as
ineligible costs.
Direct Payment Exception #3 – Expenses Related to an Illness Prevention Project
Selawik claimed $168,029 in expenses for an illness prevention project paid to the
City of Selawik. Castro tested seven transactions over this direct payment to the
City of Selawik totaling $40,528. We questioned $27,366 in costs tested, which
consisted of ineligible and unsupported costs of $27,144 and $222 respectively, as
detailed below.
For one transaction paid to the City of Selawik totaling $2,664, Castro was able to
agree the amounts to the invoice provided without exception. Selawik indicated
that the Tribal Council assisted with payments to laborers in the village to help
thaw out the water lines. If the water lines would freeze and burst, the entire
village water system would have failed, and no village homes would have running
water during the COVID-19 pandemic. After reviewing the invoice and cancelled
check, Castro determined that the invoice and payment date of January 31, 2020
occurred prior to the covered period to incur CRF expenditures that began on
March 1, 2020. As a result, we determined the incurred expenditures relating to
labor costs for the thawing of water lines did not meet the CARES Act and
Treasury’s Guidance requirements. As a result, Castro questions $2,664 as
ineligible costs.
For five hardship payment transactions paid to the City of Selawik totaling
$24,480, Selawik indicated that the Tribal Council paid the City of Selawik for
water/sewer payments on behalf of tribal citizens. In a community that already
suffered from a housing shortage and bad water pre-COVID, the Tribal Council
17
Desk Review of the Native Village of Selawik, Alaska
paid for water/sewer on behalf of community members for health and safety in
response to the pandemic. Castro reviewed the cancelled check provided by
Selawik and noted that the description on the check stated it was for utility
payments for residents. After reviewing the documentation, Castro could not
reconcile the CRF claimed amount to the check provided. Selawik also did not
provide any hardship applications for the water/sewer hardship payments needed
to verify hardship recipients needed these funds due to the COVID-19 pandemic.
Based on the results of Castro’s testing, Castro determined that Selawik made a
per capita payment to its tribal citizens and did not perform an individual
assessment of need. This is explicitly disallowed by the Federal Register. See
section " Hardship Analysis Results: $350 One-Time Hardship Payments -
Aggregate Payments to Individuals” above for expanded discussion, to include
Federal Register guidance contemplated by Castro to make this determination.
Castro questions $24,480 as ineligible costs.
For one transaction paid to the City of Selawik totaling $13,383, Selawik indicated
that the Tribal Council reimbursed the City of Selawik for COVID-19 safety and law
enforcement during the pandemic. The Village was on lockdown several times
during the pandemic and public safety workers were paid to enforce the rules and
respond to health concerns related to COVID-19. Selawik provided timesheets to
support this transaction, however, Castro was unable to recalculate the payroll
amounts because the timesheets were missing job titles, days/hours worked, pay
period date of timesheets provided, and/or pay rates. Castro requested additional
documentation to verify the information of the employees; however, Selawik did
not timely respond to our requests. As a result, Selawik’s provided documentation
to support $13,161 out of $13,383 in total expenditures claimed for this
transaction, resulting in a variance of $222. Therefore, Castro questions $222 in
payroll as unsupported costs.
Aggregate Reporting Less Than $50,000
We determined Selawik’s Aggregate Reporting less than $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We tested seven transactions
totaling $61,737. The transactions tested related to the purchase of two all-terrain
vehicles (ATVs) for workers to distribute COVID-19 supplies and enforce COVID-19
public safety rules and regulations during village quarantine lockdown; purchase
of a septic waste removal truck to maintain and improve sanitary conditions for
housing in the village in response to the COVID-19 pandemic; and construction of
a village store. We identified exceptions related to six transactions, resulting in
unsupported and ineligible questioned costs of $36,333 and $15,188, respectively,
as detailed below.
18
Desk Review of the Native Village of Selawik, Alaska
Aggregate Reporting Unsupported Exceptions Related to Vehicle Purchases
For one transaction tested totaling $19,228, Selawik indicated that two ATVs
needed to be purchased on August 6, 2020 for COVID-19 workers to use to
distribute COVID-19 supplies and enforce COVID-19 public safety rules and
regulations during village quarantine lockdown. Selawik did not respond to our
requests to elaborate on the types of supplies delivered, who these supplies were
delivered to, or on the public safety rules and regulations that were being
enforced using these ATVs during the pandemic. Castro requested, but Selawik
also did not provide documentation of any considerations of other cost-effective
alternatives to support that it was more cost-effective to purchase the vehicles
rather than leasing or improving vehicles already owned. Treasury’s Guidance in
the Federal Register Notice Volume 86, Number 10, for the CRF, Frequently Asked
Questions (FAQ) #58, 24 indicates that "a government must (i) determine that it is
not able to meet the need arising from the public health emergency in a cost-
effective manner by leasing property or equipment or by improving property
already owned and (ii) maintain documentation to support this determination.".
Without this information, Castro was unable to determine the eligibility of the
purchase of the ATVs, and if they were necessary due to COVID-19. Castro also
asked for Selawik’s most recent budget prior to the start of COVID-19 (March
2020); however, Selawik did not provide any budget document. Without this
budget, Castro could not verify whether these ATVs were previously budgeted for
prior to the start of the pandemic. Castro questions $19,228 as unsupported costs.
24
Treasury's Guidance in the Federal Register Notice Volume 86, Number 10, for the CRF, FAQ
#58, states: “May payments from the Fund be used for real property acquisition and improvements
and to purchase equipment to address the COVID-19 public health emergency? The expenses of
acquiring or improving real property and of acquiring equipment (e.g., vehicles) may be covered
with payments from the Fund in certain cases. For example, Treasury's initial guidance
referenced coverage of the costs of establishing temporary public medical facilities and other
measures to increase COVID-19 treatment capacity, including related construction costs, as an
eligible use of funds. Any such use must be consistent with the requirements of section 601(d) of
the Social Security Act as added by the CARES Act. As with all uses of payments from the Fund,
the use of payments to acquire or improve property is limited to that which is necessary due to the
COVID- 19 public health emergency. In the context of acquisitions of real estate and acquisitions of
equipment, this means that the acquisition itself must be necessary. In particular, a government
must (i) determine that it is not able to meet the need arising from the public health emergency in
a cost-effective manner by leasing property or equipment or by improving property already owned
and (ii) maintain documentation to support this determination. Likewise, an improvement, such as
the installation of modifications to permit social distancing, would need to be determined to be
necessary to address the COVID-19 public health emergency.”
19
Desk Review of the Native Village of Selawik, Alaska
For one transaction tested totaling $17,105, Selawik stated that a septic removal
trailer with container, lid, and frame was purchased in response to the COVID-19
pandemic to maintain and improve sanitary conditions for housing in the village.
Some homes did not have water connections and/or homes needed to have the
septic pumps emptied. Castro reviewed a quote dated May 29, 2020 for the septic
removal truck with container, lid, and frames and freight trailer, which we were
able to agree to the claimed CRF amount without exception. Castro reviewed the
proof of payment dated August 7, 2020; however, the old septic waste removal
truck plans that were provided were dated August 31, 2006, indicating that
replacing this older septic waste removal truck could have been part of Selawik’s
pre-COVID-19 budget. Selawik did not respond to our requests for a budget most
recently approved prior to COVID-19 and whether they had the equipment
necessary to perform this septic waste removal prior to the start of the COVID-19
pandemic. Without the most recent budget prior to the start of the pandemic,
Castro was unable to determine if these expenditures were eligible and not
previously budgeted for. Castro questions $17,105 as unsupported costs.
Aggregate Reporting Ineligible Exceptions Related to Store Construction
For four transactions tested totaling $15,188, support was associated with the
construction of the “new store.” During a CRF eligibility meeting held between
Treasury OIG and Selawik, the tribal administrator indicated that a new 8,000
square foot village store was being constructed utilizing CRF proceeds, as the “old
store” had been damaged in a fire that occurred in November 2019. Within the
Treasury OIG’s review of a complaint allegation made against Selawik, Treasury
OIG determined that expenditures related to the construction of the “new store”
did not meet CARES Act and Treasury’s Guidance requirements for eligible use of
the CRF funds since the construction of the store began in 2006 before the start of
the COVID-19 pandemic. Selawik did not respond to Castro’s requests for its most
recent budget prior to the start of the pandemic. Castro reviewed the underlying
invoice support provided, and although we noted these expenditures were
incurred within the CRF covered period, we determined that they were related to
construction of the “new store” that began in 2006. We considered these costs to
be ineligible as the store construction was already underway prior to the start of
the pandemic and was therefore included in the previous budget. Castro
questions $15,188 as ineligible.
20
Desk Review of the Native Village of Selawik, Alaska
Due to the ineligible identified costs reported in the finding above regarding the
“new store” construction already being underway prior to the start of the
pandemic, Castro questions costs related to the “new store” construction totaling
$179,794 25 as ineligible. Through Castro’s GL population reconciliation
procedures, Selawik explicitly quantified the total amount of costs incurred on the
construction of its “new store” or associated with funds provided to the Selawik
Indian Reorganization Act (IRA) Fuel Project, the entity responsible for operating
this store, as $194,982. This consisted of $33,939 in Selawik incurred payroll costs
for time its employees spent on the construction of its “new store”, $54,430 in the
Aggregate Reporting less than $50,000 payment type transactions consisting of
construction materials, contract labor, professional fees, and repairs and
maintenance expenses, and $106,613 in the Direct Payments greater than or equal
to $50,000 payment type funds provided to the Selawik IRA Fuel Project for fuel
expenses, office supplies, and payroll expenses. Since these costs related to the
“new store” where construction was already underway beginning in 2006 prior to
the start of the pandemic and was therefore included in the previous budget,
Castro questions other matters questioned costs of $179,794 as ineligible.
Castro recommends Treasury OIG follow-up with Selawik to determine if there
were additional costs claimed within the Direct Payments greater than or equal to
$50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to
Individuals payment types related to the construction of its “new store,” and if so,
to determine if those amounts should be questioned as well.
25
The $179,794 in other matter identified ineligible question costs related to the “new store”
construction and consisted of the following ineligible questions costs for the following payment
types: $106,613 in Direct Payments greater than or equal to $50,000, $39,242 in Aggregate
Reporting less than $50,000, and $33,939 in Aggregate Payments to Individuals. After excluding
$15,188 in ineligible costs already questioned within the tested Aggregate Reporting less than
$50,000 payment type, as detailed above, this resulted in other matter questioned costs of $39,242
for the Aggregate Reporting less than $50,000 payment type.
21
Desk Review of the Native Village of Selawik, Alaska
Aggregate Payments to Individuals
CRF payments made to individuals, regardless of amount, were required to be
reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information. Castro notes that the Aggregate
Payments to Individuals payment type consisted of the below broad types of
potential costs, which we have defined from Treasury’s guidance as published in
the Federal Register. 26 Prime recipients may or may not have claimed all of these
types of expenditures.
Public Health and Safety Payroll 27 – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll 28 – consisted of payroll costs for non-
public health and safety personnel who were substantially dedicated to
mitigating or responding to the COVID-19 public health emergency.
Non-Substantially Dedicated Payroll 29 – consisted of payroll costs for
personnel who performed COVID-19 related tasks on a part-time basis.
Non-Payroll Expenditures – consisted of financial assistance payments to
citizens due to hardship or loss of income, unemployment claims, and
other non-payroll related expenditures made to individuals.
26
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
27
Treasury’s Federal Register guidance provided the following examples of public health and
safety employees: “police officers (including state police officers), sheriffs and deputy sheriffs,
firefighters, emergency medical responders, correctional and detention officers, and those who
directly support such employees such as dispatchers and supervisory personnel…employees
involved in providing medical and other health services to patients and supervisory personnel,
including medical staff assigned to schools, prisons, and other such institutions, and other support
services essential for patient care (e.g., laboratory technicians) as well as employees of public
health departments directly engaged in matters related to public health and related supervisory
personnel.”
28
Substantially dedicated payroll costs meant that personnel must have dedicated over 50 percent
of their time to responding to or mitigating COVID-19. Treasury’s Federal Register guidance stated:
“The full amount of payroll and benefits expenses of substantially dedicated employees may be
covered using payments from the Fund. Treasury has not developed a precise definition of what
"substantially dedicated" means given that there is not a precise way to define this term across
different employment types. The relevant unit of government should maintain documentation of
the "substantially dedicated" conclusion with respect to its employees.”
29
Payroll costs that were not substantially dedicated were payroll costs that were not public health
and safety, and which were not substantially dedicated to performing COVID-19 related tasks.
Treasury’s Federal Register guidance defined more stringent tracking requirements for these types
of payroll costs. Specifically, Treasury’s Federal Register stated: “track time spent by employees
related to COVID-19 and apply Fund payments on that basis but would need to do so consistently
within the relevant agency or department. This means, for example, that a government could
cover payroll expenses allocated on an hourly basis to employees' time dedicated to mitigating or
responding to the COVID-19 public health emergency.”
22
Desk Review of the Native Village of Selawik, Alaska
The Selawik Aggregate Payments to Individuals balance consisted of payroll
transactions and other non-payroll expenditures from the following types of
claimed costs.
Aggregate Payments to Individuals Total Expenses
Category Types 30 Claimed
Public Health and Safety Payroll $ 536,594
Substantially Dedicated Payroll $ 320,982
CARES Act Store Renovation Payroll 31 $ 33,939
Non-Payroll Expenditures 32 $ 509,852
Totals $ 1,401,367
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation, 33 and therefore, were subject to less
detailed documentation requirements. Castro tested public health and safety
payroll transactions by reviewing itemized payroll distribution reports to support
these balances. Substantially dedicated payroll balances were not subject to this
administrative accommodation, and therefore, Castro tested these transactions by
reviewing the prime recipient’s documentation of the "substantially dedicated"
conclusion with respect to its employees and payroll distribution files, and by
performing tests over specific employee timesheet submissions.
30
Selawik did not report any non-substantially dedicated payroll within its Aggregate Payments to
Individuals payment type, and so these were not included within the Aggregate Payments to
Individuals Category Types.
31
Castro deemed these payroll expenses to be ineligible questioned costs. See footnote 25 for
further discussion.
32
Castro deemed these non-payroll hardship expenses to be ineligible questioned costs. See
"Table 3 - Summary of Selawik’s Actual CRF Hardship Payment Program Claims” for further
discussion.
33
Treasury’s Federal Register guidance stated that an administrative accommodation was, “In
recognition of the particular importance of public health and public safety workers to State, local,
and tribal government responses to the public health emergency, Treasury has provided, as an
administrative accommodation, that a State, local, or tribal government may presume that public
health and public safety employees meet the substantially dedicated test…This means that, if this
presumption applies, work performed by such employees is considered to be a substantially
different use than accounted for in the most recently approved budget as of March 27, 2020. All
costs of such employees may be covered using payments from the Fund for services provided
during the period that begins on March 1, 2020, and ends on December 31, 2021.”
23
Desk Review of the Native Village of Selawik, Alaska
We determined Selawik’s Aggregate Payments to Individuals did not comply with
the CARES Act and Treasury’s Guidance. We tested 10 transactions totaling
$28,918. Out of those selections, three transactions were for public health and
safety payroll, three transactions were for substantially dedicated payroll, and four
transactions were for non-payroll hardship payments. We determined all 10
transactions tested to be exceptions, which we have summarized below. We
question all $28,918 in Aggregate Payments to Individuals costs tested, which
consisted of $19,354 as unsupported and $9,564 as ineligible, respectively, as
detailed below.
Aggregate Payments to Individuals Ineligible Exception
For one of three substantially dedicated payroll transactions tested totaling
$9,564, Selawik provided a list of employees that were designated as substantially
dedicated to performing tasks related to the COVID-19 pandemic. Castro reviewed
a timesheet and pay stub which stated the costs were for an annual vacation
payout of 350 hours. Castro determined that using CRF proceeds for an annual
vacation payout of previously accrued benefits was essentially using CRF
proceeds to cover a cost previously budgeted prior to March 27, 2020. As such,
Castro questions $9,564 as ineligible costs.
Aggregate Payments to Individuals Unsupported Exceptions
For all three public health and safety payroll transactions tested totaling $6,510,
Selawik indicated these personnel were categorized under a Public Health and
Safety Department. We reviewed a list of employees that included vague
descriptions of their responsibilities during the COVID-19 pandemic (“COVID
Security” and “COVID Coordinator”). We asked Selawik for a description of these
positions and which department these employees worked for, but Selawik did not
timely respond to this request. The timesheets and paystubs provided detailed
that the payroll claimed was for COVID-19 hazard pay, overtime, and regular
COVID-19 hours worked; however, Selawik did not provide any policy documents
detailing its methodology for calculating hazard pay or overtime payments. Castro
noted that timesheets provided included a line for COVID-19, where employees
entered their time, but Selawik did not timely respond to our requests for pay
registers or human resources documents showing the employees’ salaries needed
for us to recalculate amounts claimed as CRF expenses. The timesheets also
included a “Daily Accomplishments” section, but none of these sections were
populated with descriptions of activities and tasks those employees were working
on. Without these details, Castro was unable to verify these employees were
public health and safety employees or that these employees were working on
tasks that were related to COVID-19. Castro questions the entire $6,510 in payroll
as unsupported costs.
24
Desk Review of the Native Village of Selawik, Alaska
For one out of three substantially dedicated payroll selections totaling $5,600,
Selawik provided a fuel project log listing out names of Selawik IRA Fuel Project
store workers and amounts claimed, which did not include any detailed
descriptions regarding what those costs were incurred for. Castro noted that the
funds were classified as COVID-19 hazardous pay; however, the eligibility
explanation included the statement “The Selawik IRA Fuel Store workers had to
shift their routine to address the COVID health and safety rules of the Tribal
Council. The Tribal Council reimbursed the Store payroll with COVID funds during
a time where workers faced job loss and the only way tribal citizens could
purchase goods was to place a phone order, and the workers had to deliver the
merchandise to tribal citizen’s doorsteps to adhere to social distancing rules and
prevent disease spread.” Castro was unable to determine if the support provided
were payments made to employees who were laid off due to the pandemic or if
the costs were for COVID-19 related hours worked. Castro also requested but did
not receive any timesheets or descriptions of tasks performed to support the
payroll claimed. Without this detail, Castro could not determine Selawik’s
substantially dedicated conclusion with respect to these employees34, or the
eligibility of the amounts claimed. As a result, Castro questions the entire $5,600
as unsupported costs.
For one out of three substantially dedicated payroll selections totaling $1,740,
Selawik provided a list of employees that identified whether the employee was
classified as 100 percent public health and safety or 50 percent substantially
dedicated. Castro noted that the employee tested had vague descriptions of
“COVID Security” and “Security” as work performed, yet the pay stubs showed
two different rates for two different weeks ($12 hourly rate for October 8, 2020 and
$30 hourly rate for week of October 14, 2020). Castro also noted that the GL
identified the individual as “non-substantial payroll,” but the listing provided was
noted as being substantially dedicated to COVID-19 greater than 50 percent. The
timesheets also included a “Daily Accomplishments” section, but none of these
sections were populated with descriptions of activities and tasks employees were
working on. Castro requested additional explanations or support to clarify the
individual’s position, work performed, and whether the individual was
substantially dedicated or non-substantially dedicated to COVID-19 tasks, but
Selawik did not timely respond to our requests. Without these details, Castro was
unable to verify these employees were working on tasks that were related to
COVID-19. As such, Castro questions the entire $1,740 as unsupported costs.
34
Treasury’s Federal Register guidance indicated: “The full amount of payroll and benefits
expenses of substantially dedicated employees may be covered using payments from the Fund.
Treasury has not developed a precise definition of what "substantially dedicated" means given that
there is not a precise way to define this term across different employment types. The relevant unit
of government should maintain documentation of the "substantially dedicated" conclusion with
respect to its employees.”
25
Desk Review of the Native Village of Selawik, Alaska
For one out of four non-payroll hardship transaction selections totaling $450,
Selawik provided a cancelled check evidencing payment directly to a vendor as
opposed to the hardship recipient for “three days of Furnace work for IRA/Tribal
members” and an “Employee Lodging and Equipment Rental Form” to be paid to
the vendor that stated “three days of work on shop heater and also fixed (name of
tribal citizen or employee’s) furnace.” We asked Selawik how these expenditures
were related to COVID-19, and whether the work was related to the community
store’s heater, for the IRA council’s building/headquarters, or for a tribal citizen’s
household. Castro also requested a completed hardship application showing that
the hardship recipient asserted to their need for that COVID-19 funding. Selawik
did not provide any additional requested information. Without the information,
Castro could not determine if the hardship recipient was eligible or if this was an
eligible expenditure. Therefore, Castro questions the entire $450 as unsupported
costs.
For another one of the four non-payroll hardship transaction selections totaling
$3,500, Selawik claimed emergency financial assistance for COVID-19 for one
adult and nine children. Castro requested a completed hardship application
showing that the hardship recipient asserted to their need for that COVID-19
funding for the applicant and dependents. We also requested documentation to
support eligibility for the nine additional applicants under this hardship request
such as a list of children on documentation such as a tax return showing the
number of dependents or other official tribal government documentation showing
support for total recipients claimed. Selawik did not provide any of the additional
requested information. Without this information, Castro could not determine if the
hardship recipient was eligible or if this was an eligible expenditure. Therefore,
Castro questions the entire $3,500 as unsupported costs.
For the third of four non-payroll hardship transaction selections totaling $850, the
payment was made to a limited liability corporation. We were provided a request
for payment with a note which stated that this was for the COVID program but
without any justification regarding the eligibility of this payment, and an
accounting system screenshot detailing the transaction was classified under
Selawik’s rent account and that the transaction was for “Patience Assistance.”
Castro requested a completed hardship application showing that the hardship
recipient asserted to their need for that COVID-19 funding, and whether this
hardship program was designed to cover only individuals or if businesses were
eligible to receive funds under the hardship program. Castro also requested proof
of profit-loss and financial statements from the business to determine if it was
suffering a loss due to the COVID-19 pandemic. Selawik did not provide any of the
additional requested information. Without the information, Castro could not
determine if the hardship recipient was eligible or if this was an eligible
expenditure. Therefore, Castro questions the entire $850 as unsupported costs.
26
Desk Review of the Native Village of Selawik, Alaska
For the fourth of four non-payroll hardship transaction selections totaling $704,
Selawik indicated that the expense was for "Reimbursement for Atauchikun
COVID quarantine unit supplies for community member that was in Anchorage
and was able to purchase (of goods for the tribe). Missing actual credit card
receipts." Since Selawik was unable to provide these receipts, Castro could not
determine if this was an eligible expenditure. Therefore, Castro questions the
entire $704 as unsupported costs.
Based on the results of Castro’s testing over $23,414 out of $857,576 in CRF
payroll expenses claimed by Selawik for Public Health and Safety and
Substantially Dedicated payroll combined, Castro recommends Treasury OIG
determine the feasibility of following up on the remaining balance of $834,162, as
it may be similarly unsupported or ineligible.
Conclusion
We determined that the expenditures related to the Direct Payments greater than
or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Reporting to Individuals payment types did not comply with the CARES Act and
Treasury’s Guidance.
We identified tested unsupported and ineligible questioned costs of $70,486 and
$226,470, respectively, resulting in total tested questioned costs of $296,956. Also,
as part of our reconciliation and hardship analytical procedures performed, Castro
identified matters separate from our detailed testing of sampled transactions
resulting in ineligible questioned costs of $879,742, increasing our total
questioned costs from $296,956 to $1,176,698.
Castro identified reporting classification errors within the Direct Payments greater
than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Reporting to Individuals payment types that did not comply with Treasury’s
Guidance.
27
Desk Review of the Native Village of Selawik, Alaska
Additionally, Selawik’s risk of unallowable use of funds is high. As a result of this
desk review, we recommend Treasury OIG:
Confirm the transactions noted as unsupported or ineligible expenditures
within the Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals
payment types are recouped or replaced by other eligible expenditures
not previously charged to CRF, that were incurred during the period of
performance. Based on Selawik’s responsiveness to Treasury OIG’s
requests and its ability to provide sufficient documentation, we
recommend Treasury OIG determine the feasibility of conducting an
audit for the Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals
payment types.
Castro also identified other matters throughout the course of our desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG follow-up on these issues:
Based on the results of Castro’s testing over $23,414 out of $857,576 in
CRF payroll expenses claimed by Selawik for Public Health and Safety
and Substantially Dedicated payroll combined, Castro recommends
Treasury OIG determine the feasibility of following up on the balance of
$834,162, as the remaining balance may be similarly unsupported or
ineligible since we had exceptions related to all payroll related
transactions we tested.
Follow-up with Selawik to determine if there were additional costs
claimed within the Direct Payments greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to
Individuals payment types related to the construction of its “new store,”
and if so, determine if those amounts should be questioned as well.
Since there were hardship payments misclassified in the Direct Payments
greater than or equal to $50,000 payment type that should have been
reported in the Aggregate Payments to Individuals payment identified
within our testing, Castro recommends Treasury OIG follow-up with
Selawik to determine if there were additional costs claimed within the
Direct Payments greater than or equal to $50,000 and Aggregate
Payments to Individuals payment types related to its hardship payments
claims, and if so, determine if those amounts should be questioned as
well.
28
Desk Review of the Native Village of Selawik, Alaska
*****
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. 35 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
35
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
29