The Office of Inspector General (OIG), Corporation for National and Community Service (Corporation), contracted with CliftonLarsonAllen LLP, an independent certified public accounting firm, to perform agreed-upon procedures (AUP) on grant costs incurred by the Edna McConnell Clark Foundation (EMCF) and three of its subgrantees. EMCF is an intermediary grantee under the Corporation’s Social Innovation Fund (SIF). This review also tested EMCF's compliance with Corporation policies and applicable regulations for Corporation-funded Federal assistance. In addition to reviewing EMCF's SIF grant administration, we selected the following EMCF subgrantees for detailed testing:
- The SEED Foundation (SEED)
- Building Educated Leaders for Life (BELL)
- Center for Employment Opportunities (CEO)
These subgrantees were judgmentally selected based on an assessment of overall risk to EMCF and the Corporation. The assessment included consideration of several factors, namely the amount of costs claimed by each subgrantee, the results of subgrantee monitoring reports, and findings, if any, contained in Circular A-133 single audit reports for each entity. Our procedures resulted in total questioned grant costs of $647,535, consisting of $348,413 in Federal share, EMCF match costs of $83,270, and subgrantee match costs of $215,852. We also identified six instances of noncompliance with the United States Code of Federal Regulations, the Corporation's grant requirements, and the subgrantee's own policies and procedures.
One significant internal control weakness involves CEO's failure to remove two of its employees, who were known by CEO management to have criminal histories that made them ineligible, from working on the SIF grant. Federal statutes prohibit such individuals from serving in this capacity. CEO attributed this situation to a lack of communication between members of its staff. We found that the three subgrantees are generally free of major financial weaknesses. The questioned costs shown above, although material, are related primarily to deficiencies in the procedures used to conduct criminal history and sex offender background checks, a pervasive compliance finding affecting each of the subgrantees. Of the $647,535 amount, SEED's questioned Federal costs of $290,251 and match costs of $70,489 (SEED) and $34,455 (EMCF) represent nearly 61 percent of the total. Further details on each subgrantee's claimed and questioned costs are at Schedules B, C, and D. Compliance findings and recommendations are discussed in the Detailed Findings section of this report beginning at page 12.
EMCF and subgrantee match represents a significant amount of the questioned costs. As of September 30, 2012, EMCF was $2,132,373 short of meeting its match requirements; however Grant 10SIHNY003 is still an active grant and the grantee has until the end of the grant term (July 31, 2015) to fulfill its match obligation.