Annual Management 

Report 

FISCAL YEAR 2018

FISCAL YEAR 2018 
 

 

 

 

 

1 https://www.nationalservice.gov/about/budget-and-performance/performance-and-accountability-reports 

2 The Administration only requested funding for an orderly CNCS shutdown in FY 2018 and FY 2019; therefore, the agency did 

not prepare performance information with these budgets. Prior year performance information is contained within CNCS budgets, 

which can be found at the referenced link. 

ABOUT THIS REPORT 
 

This Annual Management Report (AMR) focuses on CNCS’s financial management and the 

results of the agency’s annual financial audit. It includes management’s assurance statement 

regarding internal controls and compliance, CNCS’s improper payments report, and a response 

to the financial audit from management. This report can be found on CNCS’s website.1 

CNCS will produce with its FY 2019 Congressional Budget Justification an Annual Performance 

Report (APR), which provides an overall assessment of agency performance. CNCS will 

transmit this report to Congress in February 2019. Congressional Budget Justification reports can 

also be found on CNCS’s website.2 

These reports meet the requirements under the Government Performance and Results Act, the 

Federal Financial Management Improvement Act, the Federal Managers’ Financial Integrity Act, 

the Government Corporation Control Act, and the Federal Information Security Modernization 

Act, among others. These reports also follow applicable guidance from the Office of 

Management and Budget (OMB). 

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. 

The citation should be: Corporation for National and Community Service FY 2018 Annual 

Management Report, Washington, DC, 20525. 

To request a printed copy of this report, obtain it in a format that is accessible to individuals with 

disabilities, or provide any related feedback, please contact the Office of the Chief Financial 

Officer at 202-606-6852 or at this mailing address: CNCS, 250 E Street SW, Washington, D.C. 

20525. 
TABLE OF CONTENTS 

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER ............................................................ i
 

MISSION AND ORGANIZATIONAL STRUCTURE ................................................................. 1
 

CNCS Impact Highlights............................................................................................................. 2
 

Organizational Chart.................................................................................................................... 5
 

ANALYSIS OF FINANCIAL STATEMENTS AND STEWARDSHIP INFORMATION ......... 6
 

ANALYSIS OF SYSTEMS, CONTROLS AND LEGAL COMPLIANCE................................ 10
 

FINANCIAL SECTION ............................................................................................................... 12
 

Message from the Chief Financial Officer ................................................................................ 12
 

Independent Auditors’ Report on Consolidated Financial Statements...................................... 13
 

Independent Auditors’ Report on National Service Trust Funds Financial Statements............ 47
 

Consolidated Financial Statements............................................................................................ 74
 

National Service Trust Funds Financial Statements.................................................................. 78
 

Consolidated Notes to Financial Statements ............................................................................. 82
 

OTHER INFORMATION ............................................................................................................ 95
 

Summary of Financial Statement Audit and Management Assurances .................................... 95
 

Payment Integrity ...................................................................................................................... 97
 

Fraud Reduction Report........................................................................................................... 108
 

Civil Monetary Penalty Adjustment for Inflation.................................................................... 109
 

Grants Oversight & New Efficiency (GONE) Act Requirements........................................... 109
 

National Service Trust Fund Status Report ............................................................................. 111
 
 

 

 

 

 

FY 2018 Annual Management Report 

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER 

For the past quarter century, the Corporation for National and Community Service (CNCS) has 

leveraged our Nation’s greatest resource—the American people—to get things done. Working 

hand in hand with thousands of local partners, our programs meet local needs, expand 

opportunity, encourage personal responsibility, and strengthen communities. 

Our fiscal year 2018 Annual Management Report summarizes agency accomplishments and 

financial information in accordance with relevant federal guidance and laws. Our efforts this past 

year demonstrate continued commitment to effective programs, targeted investments, community 

impact, evidence-based approaches, and operational efficiency and accountability. 

Over the past year, CNCS engaged more than 300,000 AmeriCorps members and Senior Corps 

volunteers in results-drive service at 50,000 sites across the country. These trained and dedicated 

citizens met national needs and Administration priorities, helping millions of Americans succeed 

in school, prepare for 21st century jobs, live independently, increase self-sufficiency, and rebuild 

their lives after addiction, homelessness, job loss, or natural disasters. 

Among many other accomplishments, this year CNCS: 

• Deployed more than 5,000 AmeriCorps members and Senior Corps volunteers to support 

survivors of hurricanes, floods, forest fires, and other natural disasters. 

• Doubled our investment in projects working to combat the opioid crisis through education, 

prevention, treatment access, and recovery services. 

• Increased our use of evidence and evaluation in budget, management, and grant making 

practices. 

• Developed partnerships with the Veterans Administration to expand independent living 

services for veterans and with the Department of Justice to prevent elder abuse and 

encourage safe disposal of unwanted prescription drugs. 

In FY 2018, we took a series of actions to strengthen the agency and launched a comprehensive 

plan to improve business functions, streamline operations, and ensure efficient and accountable 

use of public funds. We take our responsibility to safeguard taxpayer dollars very seriously and 

are committed to continuously improving internal controls and systems. Upon becoming CEO 

midway through the fiscal year, I immediately recognized several operational and management 

challenges and have made addressing these challenges my top priority. Our Transformation and 

Sustainability Plan released last summer outlines a series of specific steps to make CNCS more 

efficient, effective, and accountable, including improving core business functions in accounting, 

financial, and budgetary practices and systems. 

We have made progress in a number of areas, and are committed to accelerating that work. Here 

are a few examples: 

• Developed a comprehensive plan to address National Service Criminal History Check 

(NSCHC) requirements and entered into a contractor with a NSCHC vendor to assist 

grantees in ensuring compliant checks. 

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FY 2018 Annual Management Report 

• Hired new directors of Accounting, Budget, Procurement, and Business Transformation to 

strengthen financial operations and management. 

• Begun an assessment with the Department of the Treasury to explore the use of shared 

services long term for internal financial management and human capital functions. 

• Awarded a contract for IT modernization of our grants and member management system. 

• Directed an external review of National Service Trust accounting and coordinated with the 

Department of the Treasury, OMB, and the Office of Inspector General on enhancements to 

Trust transactions and reporting that will be fully implemented later this year. 

While CNCS does not concur with all of the findings and recommendations in the audit reports, 

we take the reports very seriously and are committed to working with the Office of Inspector 

General and the auditors to fully and appropriately address their findings. We are committed to 

ensuring a robust internal controls program to meet all financial, programmatic and compliance 

objectives, and to taking other necessary steps to strengthen accountability and ensure efficient 

and effective use of taxpayer funds. 

As CEO, my top priority is making improvements to ensure the sustainability of national service. 

Our responsibility is too great and our mission is too important to not take these steps, which will 

help us to better serve our customers, achieve our mission, and increase our positive impact in 

communities across the Nation. 

Sincerely, 

Barbara Stewart 

Chief Executive Officer 

Corporation for National and Community Service 

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FY 2018 Annual Management Report 

MISSION AND ORGANIZATIONAL STRUCTURE 

The Corporation for National and Community Service (CNCS) was established by the National 

and Community Service Trust Act of 1993. Its mission is to engage Americans of all ages and 

backgrounds in community based service that improves lives, strengthens communities, and 

fosters civic engagement by providing grants to organizations that host members for specific 

service projects. CNCS executes this mission primarily through its AmeriCorps and Senior 

Corps programs. 

These programs are run through a combination of efforts by CNCS and State Service 

Commissions. The State Service Commissions (located in 49 states, the District of Columbia, 

Guam, and Puerto Rico) administer CNCS’s AmeriCorps State grant funds, which are awarded 

on both a competitive and formula basis. CNCS awards AmeriCorps National and tribe grants on 

a competitive basis, Senior Corps grants, and directly administers the AmeriCorps VISTA and 

AmeriCorps National Civilian Community Corps (NCCC) programs. 

In accordance with CNCS’s authorizing statute, the National and Community Service Act and 

the Domestic Volunteer Service Act, CNCS projects help communities solve problems across the 

following focus areas: 

 Disaster Services 

 Economic Opportunity 

 Education 

 Environmental Stewardship 

 Healthy Futures 

 Veterans and Military Families 

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FY 2018 Annual Management Report 

CNCS Impact Highlights3 

CNCS State of the Evidence 

In FY 2017 CNCS released its State of the Evidence Report, which provides a compelling 

case for national service and the agency’s role in supporting projects that have a positive 

impact on communities across the nation. Key findings include: 

Civic engagement promotes the quality of life in a community; communities with strong civic 

participation enjoy positive social benefits; and living in good neighborhoods contributes to 

upward mobility later in life. 

Volunteers have 27 percent higher odds of finding employment after being out of work than 

non-volunteers (rises to 55 percent for those in rural areas). 

AmeriCorps members report gaining critical educational, employment, and civic benefits 

through service with 80 percent saying in a recent survey that service helped their career path. 

In addition to evidence cited on the previous page, the following is a small sample of agency 

accomplishments in recent years during which CNCS: 

3 CNCS’s State of the Evidence report can be found at: 

https://www.nationalservice.gov/sites/default/files/evidenceexchange/FR_2017%20State%20of%20the%20Evidence%2 

0Report_0.pdf 

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FY 2018 Annual Management Report 

 Continued to help communities, especially in underserved rural areas, solve their most 

pressing problems across critical service focus areas. 

o Disaster Services – The agency deployed more than 5,000 AmeriCorps and Senior 

Corps members to Texas, Florida, Georgia, Puerto Rico, and the U.S. Virgin Islands 

to support the nearly 47 million people impacted by Hurricanes Harvey, Irma, and 

Maria (since 2017).4 

o Economic Opportunity and Education – The Agency’s AmeriCorps members 

earned approximately $4.8 million in education awards, which will help volunteers 

pay for college and prepare them for America’s strong job market (FY 2018).5 

o Healthy Futures – The agency significantly increased investment in drug prevention, 

reduction, and recovery programs such as those fighting the opioid epidemic, by 

supporting more than 1,800 Senior Corps volunteers and AmeriCorps members in all 

50 states (since 2017).6 

o Veterans and Military Families – The agency served more than 360,000 veterans 

through its Senior Corps programs (FY 2018).7 

 Grew the number of evidence-based projects. 

o CNCS increased to 26 percent from 18 percent the portion of AmeriCorps funding to 

projects with strong evidence (FY 2018).8 

o CNCS identified and prioritized 13 evidence-based national service education 

interventions in the AmeriCorps Notice of Funding Opportunity released in FY 2018 

for awards in FY 2019.9 

 Ten (77 percent) of the models focused on K-12 success and provided a wide 

range of services for different age groups, from literacy development 

programs in elementary school to one-on-one tutoring for high school 

students. 

 Two (15 percent) of the models focused on school readiness, including 

literacy development support in preschools and home visiting for parents with 

young children to develop their literacy skills. 

 One (8 percent) of the models focused on postsecondary preparation and 

providing college preparation support in high schools. 

 Fostered partnerships with other Federal Agencies. 

o CNCS entered into a new agreement with the Veterans Administration to provide 

companion services to veterans and their caregivers (FY 2018). 

o CNCS continued to support FEMA Corps, an agreement with the Department of 

Homeland Security to fund up to 1,000 volunteers who help communities respond to 

disasters (FY 2018). 

4 https://www.nationalservice.gov/focus-areas/disaster-services/2017-disasters 

5 See Trust section of this report. Based on Education Awards earned. 

6 https://content.govdelivery.com/accounts/USCNCS/bulletins/214c021 

7 Estimated based on grantee-reported data in CNCS’s grant management system. 8 Estimated based on AmeriCorps State and National competitive funding awards. 

9 Based on AmeriCorps State and National Competitive funding. https://www.nationalservice.gov/documents/2018/2019-noticefunding-opportunity 

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FY 2018 Annual Management Report 

 Strengthened core business operations. 

o The agency targeted funding to ensure full compliance with Criminal History Check 

requirements in FY 2019 and beyond (FY 2018).10 

o The agency continued to modernize its grants management systems (FY 2018). 

Additionally, in FY 2018 CNCS embarked on a plan to transform the way it does business that 

will ensure national service remains an important part of our country’s success. Informed by the 

President’s Management Agenda11, this plan will: 

 Strengthen our impact in communities by prioritizing evidence-based models 

 Ensure our core business functions are accountable and effective 

 Make it easier for organizations and individuals to participate in our programs 

 Align our workforce and workplaces to better serve our customers, meet evolving needs, and 

ensure efficient use of public funds 

More details about this plan can be found at CNCS’s website.

12 

10 CNCS grantees must comply with CNCS regulations that require program participants to pass a background screening. 11 https://www.whitehouse.gov/wp-content/uploads/2018/03/Presidents-Management-Agenda.pdf 12 https://www.nationalservice.gov/about-cncs/transformation-and-sustainability-plan. 

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FY 2018 Annual Management Report 

Organizational Chart 
 

Page | 5 
FY 2018 Annual Management Report
 

 Page | 6
 

 

ANALYSIS OF FINANCIAL STATEMENTS AND 

STEWARDSHIP INFORMATION 

The accompanying FY 2018 financial statements have been prepared in accordance with the 

accounting standards codified in the Statements of Federal Financial Accounting Standards and 

with Office of Management and Budget (OMB) Circular No. A-136, Financial Reporting 

Requirements. 

Table of Key Measures (in thousands) 

Balance Sheet: Summary of Data 

Unaudited 

2018 

Unaudited 

Restated 

2017 

Percent 

Change 

Fund Balance with Treasury $ 1,210,560 $ 1,047,393 16% 

Investments and Related Receivables 792,816 866,834 -9% 

Accounts Receivable, Net 8,602 9,576 -10% 

Cash and Other Monetary Assets 25 118 -79% 

Advances to Others 66,662 62,560 7% 

Property and Equipment, Net 28,440 24,356 17% 

Total Assets $ 2,107,105 $ 2,010,837 5% Accounts Payable $ 482 $ 3,864 -88% 

Other Liabilities 15,338 14,246 -8% 

Advances from Others 13,611 18,592 -27% 

Trust Service Award Liability 304,320 388,134 -22% 

Grants Payable 130,773 95,228 37% 

Actuarial FECA Liability 7,168 7,328 -2% 

Total Liabilities 471,693 527,392 -11% 

Total Net Position 1,635,413 1,483,445 11% 

Total Liabilities and Net Position $ 2,107,105 $ 2,010,837 5% 

Statement of Net Cost: Summary of Data 

 

 Unaudited 

2018 

 

 Unaudited 

Restated 

2017 

Percent 

Change 

Gross Costs $ 948,886 $ 986,173 -4% 

 

Less: Earned revenue (52,346) (50,302) 3% 

Net Cost of Operations $ 896,540 $ 935,871 -4% 

Statement of Budgetary Resources: Summary of 

Data Unaudited 

2018 

Unaudited 

Restated 

2017 

Percent 

Change 

Unobligated Balance from prior year budget authority, 

net (discretionary and mandatory) $ 323,903 $ 306,954 6% 

Appropriations (discretionary and mandatary) 1,284,042 1,251,773 4% 

Spending authority from offsetting collections 

(discretionary and mandatary) 40,084 39,619 1% 

Total Budgetary resources $ 1,648,030 $ 1,598,346 3% 

 
 

 

 

 

3.16% Composition of Assets 

57.45% 

37.63% 

0.41% 

0.00% 

1.35% 

Fund Balance with Treasury 

Investments and Related 

Receivables 

Accounts Receivable, Net 

Cash and Other Monetary Assets 


 

 
 

 

FY 2018 Annual Management Report 

The Balance Sheet provides an overview of CNCS’s financial position at the end of the fiscal 

year. The statement displays the current and future economic benefits owed or available for use 

(assets), amounts owed (liabilities) and the residual amount (net position) at September 30th. 

Total Assets, 

$2,107,105 

Total Liabilities, 

$471,692 

Total Net Position, 

$1,635,413 

Total Assets, 

$2,010,837 

Total Liabilities, 

$527,392 

Total Net Position, 

$1,483,445 

Total Assets Total Liabilities Total Net Position 

Comparative Balance Sheet 

2018 2017 

Assets 

At the end of FY 2018 and 2017, CNCS had $2.10 billion and $2.01 billion in assets, 

respectively. Fund Balance with Treasury (FBWT) and Investments in Securities formed 

majority of the assets. The Balance Sheet also identities governmental and non-governmental 

activities. 

Fund Balance with Treasury: FBWT is the largest asset class, representing 57% of total assets. 

FBWT increased by $163 million in FY 2018 due primarily to the sale of treasury securities to 

cover the planned rescission on the National Service Trust fund and also due to an increase in 

appropriated funds. 

Investments: Investment is 37% of total assets and that makes it the second largest class. Funding 

for the Trust investments comes from appropriations, interest earned, sponsorships and proceeds 

from the sale or redemptions of investments. In FY 2018, there was a $74 million decrease in 

investment due primarily to the sale of Treasury bills. 

Page | 7 

 

 
 

 

 

 

 

FY 2018 Annual Management Report 

Liabilities 

CNCS liabilities, or amounts owed were $472 million and $527 million for the fiscal years ended 

2018 and 2017, respectively. The majority of the liabilities are $304 million in Trust Service 

award and $130 million in Grants payable. The Trust Service Award Liability represents 

estimates of unpaid and earned education award and interest forbearance costs that are likely to 

be paid. The Grants payables on the other hand represent funds due to grantees for performance 

under a grant. 

 

0.10% Composition of Liabilities 

1.52% 3.20% 3.02% 

64.46% 

27.70% 

Accounts Payable 

Other Liabilities 

Advances from Others 

Trust Service Award Liability 

Grants Payable 

Actuarial FECA Liability 

Net Position 

CNCS Net Position is the difference between assets and liabilities. Changes in Net Position 

result from changes in the cumulative results of operations. In FY 2018, there was a $152 million 

increase in cumulative results of operations which was mostly caused by $83 million drop in 

Trust service award expense in FY 2018 compared to FY 2017. 

 

Comparative Net Position 

973,892 

989,069 509,553 

646,344 

1,483,445 

1,635,413 

U ne xp e n d e d Ap p r o p r i a t i o n C u mula t i ve R e s u lts o f N e t P o s i t i o n 

O p e r a t i o ns 

2018 2017 

Statement of Net Cost 

CNCS Statement of net cost measures the use of appropriated funds by programs (AmeriCorps 

VISTA, AmeriCorps NCCC, AmeriCorps State and National, Senior Corps) authorized by 

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FY 2018 Annual Management Report 

Congress. CNCS net cost for the period ending September 30, 2018 and 2017 were $896 million 

and $935 million, respectively. The 4% drop in operating cost in FY 2018 is mostly due to the 

decrease in Trust service awards expense. AmeriCorps State and National is the largest 

contributor to the Agency’s overall cost of operations. The program cost includes grant expenses, 

direct and allocated personnel and administrative cost. 

Comparative Net Cost 

$986,173 $948,886 $935,871 

$(52,346) 

$896,540 

$(50,302) 

Gross Costs Earned revenue Net Cost of Operations 

2018 2017 

Statement of Budgetary Resources 

The statement of budgetary resources represents CNCS’s budgetary resources, which comes 

from unobligated balances from prior-year appropriations, new appropriations, and limited 

receipts from other sources (such as collections of disallowed costs from grantees) at the end of 

the reporting fiscal year. In FY 2018, CNCS had a $32 million increase in appropriations 

received from Congress compared to FY 2017. 

 

 

 

 

 

 

 

1,648,030 1,598,346 

323,904 

306,954 

40,084 

39,619 

1,284,042 

1,251,773 

Comparative Budgetary Resources 

U n o b liga t e d b a l a nc e Ap p r o p r i a t i o n s S p e nd i ng a u t ho r i t y T o t a l B u d g e ta r y 

f r o m p r i o r ye a r ( d isc r e t i o n a r y a nd f r o m o ffs e t t i n g r e so ur c e s 

b u d ge t a ut h o r i t y, ne t ma n d a t a r y) c o ll e c t i o n s 

( d i s c a nd ma n d ) ( d isc r e t i o n a r y a nd 

ma nd a t a r y) 

2018 2017 

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FY 2018 Annual Management Report 

ANALYSIS OF SYSTEMS, CONTROLS AND LEGAL 

COMPLIANCE 

FY2018 Annual Assurance Statement 

The Corporation for National and Community Service (CNCS) management is responsible for managing risks and 

maintaining effective internal control to meet the objectives of Sections 2 and 4 of the Federal Managers' Financial 

Integrity Act. CNCS conducted its assessment of risk and internal control in accordance with OMB Circular No. A-123, 

Management's Responsibility for Enterprise Risk Management and Internal Control. Based on the results of the 

assessment, the CNCS can provide reasonable assurance that internal control over operations, reporting, and compliance 

was operating effectively as of September 30, 2018, except for the material weaknesses reported below. To address these 

material weaknesses, and also tackle the agency’s most critical organizational challenges, my leadership team has 

developed a Transformation and Sustainability Plan that has as its top priority, strengthening core business functions. 

This includes improving accounting and financial systems and operations and modernizing critical technology 

infrastructure. I look forward to sharing updates with you in our next Annual Management Report. 

Barbara Stewart 

Chief Executive Officer 

250 E Street, SW 

Washington, D.C. 20525 

202-606-5000 | 800-942-2677 | TTY 800-833-3722 

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FY 2018 Annual Management Report

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Material Weaknesses 

Audit Area NFR 

# 

Description of Material Weakness First Year 

Reported 

Grant Accrual 

Payable and 

Advances 

18-1 CNCS adopted the HHS grant accrual methodology but have yet to validate whether the HHS 

accrual is consistent with CNCS operations and/or assess the accuracy of the estimate. For FY 

2018, CNCS implemented an interim grant accrual methodology in the 3rd quarter to use the HHS 

calculated disbursement and IBNR cost estimates for its grant accrual. However, Management did 

not have the time and resources to fully evaluate and document the support for its new grant 

accrual methodology to show that it was reasonable and reliable. 

2017 

Trust Fund 

Unpaid 

Obligations 

18-2 Management did not report balances for downward adjustment of “Prior-Year Unpaid Undelivered 

Orders – Obligations, Recoveries and did not separately record transactions for “Upward 

Adjustment of Prior-Year Undelivered Orders-Obligations, Unpaid”. Some account balances did 

not have adequate support. 

2017 

Trust Service 

Award Liability 

18-3 FY 2017 TSAL model deficiencies persist, and CNCS lacks knowledgeable staff, jeopardizing the 

accuracy of its largest liability. 

2017 

Undelivered 

orders & Account 

Payable 

18-6 CNCS only records AP accrual for IBNR at year-end financial reporting process, which leads to 

understatement of AP balance in Consolidated Statements of Financial Positions as of 6/30/2018. 

2018 

18-15 CNCS does not maintain all documentation in contract file and does not maintain contract files 

electronically, which makes it difficult to locate files. CNCS does not regularly monitor 

outstanding procurement UDO to ensure such balances are supported and reconciled back to valid 

contracts. 

Property, Plant & 

Equipment 

18-7 CNCS did not properly capitalize costs related to the Grants Member Management project. 

Instead, these costs were expensed. CNCS only recorded depreciations expense in the first three 

quarters of FY 2018. Costs are only capitalized at year end. In addition, CNCS does not capitalize 

any indirect costs in associated with internal use software as required by Federal Accounting 

standards. 

2018 

Prior Year 

Recoveries 

18-10 Recovery transactions were not properly supported and CNCS did not maintain adequate support 

for the transactions recorded in accounting system. Grant Closeout letter was not submitted to a 

Grantee. 

2018 

Other Liabilities 18-12 Adequate documentation was not properly maintained by CNCS management to support 

transactions reported in the Other Liabilities line item.

2018 

Undelivered 

Orders -Grant 

18-14 For some grant awards, the total grant award amount recorded in the accounting system 

(Momentum) did not agree to the total grant award amount from the most recent Notice of Grant 

Award (NGA) as of 6/30/18. Grant expenditures from the Payment Management System (PMS) 

did not agree to the recorded expenditures in Momentum. Grants remained current for more than 

one year after the end of their period of performance. Transaction definition used to record grant 

expenditures is not consistent with the United States Standard General Ledger (USSGL) 

transaction 

2018 

Financial 

Reporting & 

Standard voucher 

18-11 

18-16

Overreliance on journal vouchers (JV) to correct transaction definition inaccuracies and fix 

ineffective internal controls over the CNCS Budget Executions Process. JVs transaction were not 

supported by adequate documentation. Recording of Downward Adjustment of Prior Year 

Recoveries is not consistent with Treasury and the Office of Management Budget (OMB) 

guidance. 

2018 

The financial statements were not prepared and presented in accordance with Federal standards. 2017 

Internal Control 

Program

18-18 CNCS management did not perform internal controls assessment around key business processes. 2018 
FY 2018 Annual Management Report

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FINANCIAL SECTION

Message from the Chief Financial Officer 

FY 2018 Annual Management Report

Page | i

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER

I am pleased to join CNCS’s CEO in presenting the agency’s FY 2018 Annual Management report, 

which is inspired by a strong service ethic and aligned with the Transformation and Sustainability Plan 

highlighted earlier in this document. 

Using its new plan as a foundation, CNCS implemented aggressive actions to bolster its financial management last fiscal year. For example, the agency:

• Began to explore potential shared services for targeted transaction functions, which

could – if adopted – reduce financial reporting errors and allow staff more time to focus

on decision-support analysis.

• Filled key accounting vacancies that included hiring dedicated audit and National Service Trust accountants who will help ensure accurate and reliable fiscal information.

• Began to reorganize the agency’s procurement team and implement enhanced acquisition processes such as using GSA buy lists for targeted purchases.

• Updated CNCS’s grant accrual process to enhance financial reporting.

These enhancements among many others will help CNCS continue to address concerns raised in this 

year’s Independent Auditor’s Report, which identified ten material weaknesses detailed later in this 

document. Fortunately, CNCS has already made significant progress remediating several of those weaknesses and is developing an aggressive plan to address the rest.

In closing, I would like to recognize all of the staff who diligently worked through challenging times 

with limited resources last year. Those who put in the extra effort to help a volunteer claim their education award or complete a disaster-related mission assignment. Our financial teams are an often-forgotten cornerstone of national service that also get things done for America. 

 Robert McCarty

FY 2018 Annual Management Report

FINANCIAL SECTION

Message from the Chief Financial Officer 
FY 2018 Annual Management Report 

Independent Auditors’ Report on Consolidated Financial Statements 

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CORPORATION FOR NATIONAL 

& COMMUNITY SERVICE

OFFICE OF INSPECTOR GENERAL

AUDIT OF THE CORPORATION FOR

NATIONAL AND COMMUNITY SERVICE'S

FISCAL YEAR 2018 

CONSOLIDATED FINANCIAL STATEMENTS

OIG Report 19-01

Prepared by:

CliftonLarsonAllen LLP

901 North Glebe Road, Suite 200

Arlington, VA 22203

This report was issued to Corporation management on November 15, 2018 . Under the laws and

regulations governing audit follow up, the Corporation is to make final management

decisions on the report’s findings and recommendations no later than May 15, 2019, and

complete its corrective actions by November 15, 2019 . Consequently, the reported findings

do not necessarily represent the final resolution of the issues presented.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY 2018 Annual Management Report 

November 15, 2018 

TO: Barbara Stewart

Chief Executive Officer

FROM: Carol Bates /s/

Acting Assistant Inspector General for Audit

SUBJECT: Audit of the Corporation for National and Community Service’s

Fiscal Year 2018 Consolidated Financial Statements, OIG Report 19-01 

We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP

(CLA) to audit the consolidated financial statements of the Corporation for National and

Community Service (CNCS) as of September 30, 2018 and for the year then ended. The contract

required that the audit be performed in accordance with the United States generally accepted

government auditing standards and applicableOffice of Management and Budget audit guidance.

In its audit of the fiscal year 2018 CNCS consolidated financial statements, CLA reported:

• Disclaimer of Opinion: CNCS was unable to provide adequate evidential matter to support a

significant number of transactions and account balances due to inadequate processes and 

controls to support transactions and estimates, and incomplete records to support

accounting fortransactionsin accordance with generally accepted accounting principles. CLA

has not been able to obtain sufficient appropriate audit evidence to provide a basis for an 

audit opinion.

• Ten material weaknesses and two significant deficiencies in CNCS’s internal control over

financial reporting. These issues included: o Material Weaknesses:

§ Internal Controls Program;

§ Financial System and Reporting;

§ Trust Fund Unpaid Obligations;

§ Trust Service Award Liability;

§ Grants Accrual Payable and Advances;

§ Undelivered Orders and Accounts Payable - Procurement;

§ Property and Equipment;

§ Undelivered Orders - Grants;

§ Recoveries of Prior Year Obligations; and

§ Other Liabilities

250 E Street, SW « Suite 4100 « Washington, DC 20525 202-606-9390 

« Hotline: 800-452-8210 « www.cncsoig.gov 

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FY 2018 Annual Management Report 

o Significant Deficiencies:

§ Information Technology Security Controls; and

§ Accounts Receivable and Allowance for Doubtful Accounts

• CLA was unable to perform all applicable tests of CNCS’s compliance with certain provisions

of laws, regulations, contracts, and grant agreements, noncompliance which could have a

direct and material effect on the determination of financial statement amounts and

disclosures.

Had CLA been able to obtain sufficient appropriate audit evidence to express an opinion on the

CNCS consolidated financial statements, other material weaknesses orsignificant deficiencies, or

instances of noncompliance or other matters may have been identified and reported.

In connection with the contract, we reviewed CLA’s report and related documentation and

inquired of its representatives. Our review, as differentiated from an audit of the financial

statements in accordance with United States generally accepted government auditing standards,

was not intended to enable us to express, and we do not express, an opinion on CNCS’s financial

statements or conclusions about the effectiveness of internal control over financial reporting; or

conclusions on compliance with applicable provisions of laws, regulations, contracts, and grant

agreements.

CLA is responsible for the attached independent auditors’ report, dated November 5, 2018, and

the conclusions expressed therein. However, our review disclosed no instances where CLA did

not comply, in all material respects, with United States generally accepted government auditing

standards.

Attachment

cc: Desiree Tucker-Sorini, Chief of Staff 

Timothy Noelker, General Counsel

Robert McCarty, Chief Financial Officer

Edward (Woody) Davis Jr., Acting Chief Information Officer

Lori Giblin, Chief Risk Officer

Lora Pollari-Welbes, Audits and Investigations Program Manager Mia 

Leswing, Principal-in-Charge, CliftonLarsonAllen LLP

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Inspector General of the

Corporation for National and Community Service

Report on the Financial Statements

We were engaged to audit the accompanying consolidated financial statements of the

Corporation for National and Community Service (CNCS), which comprise the balance sheets as 

of September 30, 2018 and 2017, the statements of net cost and changes in net position, the

combined statements of budgetary resources, for the years then ended, and the related notes to

the financial statements (referred to herein as financial statements).

Management’s Responsibility for the Financial Statements

CNCS management is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting principles generally accepted in the United States of

America (U.S.); this includes the design, implementation, and maintenance of internal control

relevant to the preparation and fair presentation of financial statements that are free from

material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility isto express an opinion on these financialstatements based on conducting the

audit in accordance with auditing standards generally accepted in the U.S.; the standards

applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin

No. 19-01, Audit Requirements for Federal Financial Statements (OMB Bulletin 19-01). Because

of the matters described in the Basis for Disclaimer of Opinion paragraph; however, we were not

able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

CNCS was unable to provide adequate evidential matter to support a significant number of

transactions and account balances, as presented in the accompanying financial statements as of

and for the years ended September 30, 2018 and 2017, due to inadequate processes and controls

to support transactions and estimates, and incomplete records to support accounting for

transactions in accordance with generally accepted accounting principles. The financial

statement line items impacted by the lack of evidential matter include but are not limited to

1

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT (Continued)

Advances to Others; Property and Equipment; Trust Service Award Liability; Trust Fund Unpaid

Obligations; Grant Accrual Payable and Advances; Accounts Payable; Advances From Other;

Other Liabilities; Prior Year Recoveries and Obligations. In addition, we were not able to audit

beginning balances.

Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion

paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a

basisfor an audit opinion. Accordingly, we do not express an opinion on the financialstatements

referred to in the first paragraph.

Report on Internal Control over Financial Reporting and on Compliance Based on an Audit of

Financial Statements Performed in Accordance with Government Auditing Standards

Internal Control over Financial Reporting

In connection with our engagement to audit the financial statements, we considered CNCS’s

internal control over financial reporting (internal control) to determine the audit proceduresthat

are appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of CNCS’s

internal control. Accordingly, we do not express an opinion on the effectiveness of CNCS’s

internal control. We did not test all internal controls relevant to operating objectives as broadly

defined by the Federal Managers’ Financial Integrity Act of 1982 (FMFIA).

Our consideration of internal control was for the limited purpose described in the preceding

paragraph and was not designed to identify all deficiencies in internal control that might be

material weaknesses or significant deficiencies; therefore, material weaknesses or significant

deficiencies may exist that have not been identified. However, as described in Exhibits A and B,

we identified certain deficiencies in internal control that we consider to be material weaknesses

and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a 

deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable

possibility that a material misstatement of the financial statements will not be prevented, or

detected and corrected on a timely basis. We consider the deficiencies in the areas below, and

described in Exhibit A to be material weaknesses. 

1. Internal Controls Program (FMFIA)

2. Financial System and Reporting

3. Trust Fund Unpaid Obligations

4. Trust Service Award Liability

2

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT (Continued)

5. Grants Accrual Payable and Advances

6. Undelivered Orders and Accounts Payable - Procurement

7. Property and Equipment

8. Undelivered Orders - Grants

9. Recoveries of Prior Year Obligations

10. Other Liabilities

A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is

less severe than a material weakness, yet important enough to merit attention by those charged

with governance. We consider the deficiencies in the area below, and described in Exhibit B to

be significant deficiencies.

11. Information Technology Security Controls

12. Accounts Receivable and Allowance for Doubtful Accounts

Had we been able to obtain sufficient appropriate audit evidence to express an opinion on the

financial statements, other material weaknesses or significant deficiencies may have been

identified and reported herein.

Compliance with Laws, Regulations, Contracts, and Grant Agreements and Other Matters

In connection with our engagement to audit the financial statements, we were not able to

perform all applicable tests of CNCS’s compliance with certain provisions of laws, regulations,

contracts, and grant agreements, noncompliance with which could have a direct and material

effect on the determination of financial statement amounts and disclosures. Had we been able

to obtain sufficient appropriate audit evidence to express an opinion on the financialstatements,

instances of noncompliance or other matters may have been identified and reported herein.

Also, providing an opinion on compliance with those provisions was not an objective of our

engagement, and accordingly, we do not express such an opinion.

Management’s Responsibility for Internal Control and Compliance

CNCS management is responsible for (1) evaluating the effectiveness of internal control over

financialreporting based on criteria established underthe FMFIA and Government Accountability

Office’s Standards for Internal Control in the Federal Government, (2) providing a statement of 

assurance on the overall effectiveness on internal control over financial reporting, and (3) 

complying with other applicable laws, regulations, contracts, and grant agreements.

Auditors’ Responsibilities

We are responsible for (1) obtaining a sufficient understanding of internal control over financial

reporting to plan the audit, and (2) testing compliance with certain provisions of laws,

regulations, contracts, and grant agreements.

3

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT (Continued)

We limited our tests to certain provisions of laws, regulations, contracts, and grants agreements

noncompliance with which could have a direct effect on the determination of material financial

statement amounts and disclosures. We were not able to perform all applicable tests of CNCS’s

compliance due to inability to obtain sufficient appropriate audit evidence to enable usto express

an opinion on the financial statements. Also, providing an opinion on compliance with those

provisions was not an objective of our engagement, and accordingly, we do not express such an 

opinion.

CNCS’s Response to Findings

CNCS’s response to the audit findings in our report is included in Exhibit C. In its response, CNCS 

stated that “CNCS does not entirely concur with all of the conditions and recommendations in 

the reports.” CNCS, however, did not provide CLA with any responses to its conditions and

recommendations. Accordingly, CLA was not aware of which conditions and recommendations

were non-concurred with. CLA stands by the results of its audit. We did not audit CNCS’s

response and, accordingly, we express no opinion on the response.

Status of Prior Year Findings

The status of findings in prior year Independent Auditors’ Report, dated November 8, 2017, is 

included in Exhibit D.

Purpose of the Report on Internal Control over Financial Reporting and on Compliance

The purpose of the Report on Internal Control over Financial Reporting and on Compliance is

solely to describe the scope of our testing of internal control and compliance and the result of

that testing, and not to provide an opinion on the effectiveness of CNCS’s internal control or on

compliance. These reports are an integral part of an audit performed in accordance with

Government Auditing Standards in considering CNCS’s internal control and compliance.

Accordingly, these reports are not suitable for any other purpose.

CLIFTONLARSONALLEN LLP

Arlington, Virginia

November 5, 2018

4

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FY 2018 Annual Management Report

Page | i

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER

FY 2018 Annual Management Report

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5 

EXHIBIT A 

Material Weakness

1. Internal Controls Program (FMFIA) (new material weakness)

An effective system of internal control is necessary to provide reasonable assurance that a 

Federal entity conducts its programmatic activities effectively and efficiently, has a reliable 

financial reporting system and complies with applicable laws and regulations. OMB Circular No. 

A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, Policy

section. Without a fully functional internal controls program, CNCS might not meet its financial,

programmatic and compliance objectives. Establishing internal controls that meet Federal

standards is a core responsibility of the management of a Federal agency, as required by the

Federal Managers Financial Integrity Act of 1982, OMB Circular No. A-123 and the Government

Accountability Office’s (GAO’s) Standards for Internal Control in the Federal Government.

In Fiscal Year (FY) 2018, CNCS’s system of internal control did not meet Federal requirements or 

operate effectively. The system of internal controls failed to identify numerous and pervasive 

material weaknesses that we found in financial reporting and in specific material line items on 

the financial statements. CNCS also did not complete corrective actions for the four material 

weaknesses identified in last year’s financial statement audits, and those material weaknesses 

persisted during FY 2018. 

Individual deficiencies include: 

• CNCS’s entity-level control assessment noted that entity-level controls supporting

five of the 17 internal control principles were not operating effectively.

1

• CNCS failed to identify five new material weaknesses discovered by auditors in the

FY 2018 financial statement audit.

• CNCS had incomplete or inaccurate business process narratives for critical

financial statement processes and items, such as:

o Trust Service Award Liability;

o Accounts Payable (AP) and Expenditures;

o Financial Reporting (Expense-Cost Allocation); and

o Accounts Receivable (AR)

1 The five principles are: 

• Principle 10: Management should design control activities to achieve objectives and respond to risk; 

• Principle 11: Management should design the entity’s information system and related control activities to 

achieve objectives and respond to risks; 

• Principle 12: Management should implement control activities through policies; 

• Principle 13: Management should use quality information to achieve the entity’s objectives; and 

• Principle 15: Management should externally communicate the necessary quality information to achieve 

entity’s objectives.

See GAO’s Standards for Internal Control in the Federal Government.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

• CNCS’s risk assessment process failed to identify the following significant accounts

as high risk:

o Advances to Others;

o Procurement Process Management;

o Accounts Payable (and Expenditures); and

o Property and Equipment

• CNCS did not conduct adequate testing of the design and operating effectiveness

of the following critical business processes:

o Financial Reporting;

o Revenue and Accounts Receivable; and

o Property Management

• CNCS did not test the design and operating effectiveness of the internal controls

related to the following significant accounts:

o Grants Payable (accrual calculation);

o Grant Advances;

o Accounts Payable; and

o Trust Service Award Liability

• CNCS did not implement corrective action plans for the four material weaknesses

we reported in the prior year financial statement audit, including the material

weakness in its financial reporting.

• CNCS did not assess information security risks to its external systems managed by

service providers.

• CNCS did not timely provide to the external auditors a risk register that records

identified risks at the mission and business process level, or Tier 2 as defined by

the National Institute of Standards and Technology.

Despite these persistent and pervasive material weaknesses, CNCS’s Chief Executive Officer

(CEO) asserted in her FY 2018 assurance statement that, based on CNCS’s assessment of risk and

internal control, CNCS could provide reasonable assurance that CNCS’s internal control over 

operations, reporting and compliance was operating effectively as of September 30, 2018, except

for the material weaknesses identified in our audit. CNCS did not provide us with evidence to

support this modified assurance statement, and it is not justified by the results of CNCS’s own

testing. OMB Circular No. A-123 clearly states that agency management should provide

statement of no assurance when there are either “no processes in place or pervasive material

weaknesses.”2 (emphasis added)

2 OMB Circular No. A-123, Section VI. E.

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

Given (1) the acknowledged material weakness in internal control over financial reporting; (2)

the individual material weaknesses we found in numerous material line items on the financial

statements, including CNCS’s largest liability account – Trust Service Award Liability; (3) CNCS’s

own failure to identify the material weaknesses that we found; (4) CNCS’s acknowledged failure

to complete testing of controls over critical processes; and (5) the failure to resolve corrective

actionsfor the material weaknesses found in last year’s audit, it is difficult to see how CNCS could

offer any assurance about the adequacy of its internal controls over financial reporting. The

CEO’s assurance statement omitted the required statement as to whether CNCS’s financial

management systems were in compliance with applicable Federal requirements.

Furthermore, the CEO’s assurance statement did not accurately describe the extent and

seriousness of the financial reporting issues identified by the external auditors. The material 

weakness in financial reporting was not merely that “[t]he financial statements were not

prepared and presented in accordance with Federal standards.” Rather, we identified pervasive 

and systemic internal control failuresthat impact the integrity, accuracy and the overall reliability

of the financial statements. Refer to the financial system and reporting material weakness

number 2 below for details.

While we did not audit the internal control over programmatic operations, we also take note that 

CNCS has not completed or implemented corrective actions to address the serious grant

monitoring weaknesses reported by GAO3 and by CNCS-OIG.4 These open recommendations

relate to the accuracy of CNCS’s grant risk assessment and the design and effectiveness of its 

grant management and monitoring. The absence of sound monitoring of CNCS’s core business,

which accounts for 75 percent of its operating budget, represents a potentially serious gap in the

internal control over operations.5 It is not clear whether or how CNCS considered information

from the GAO report or from the OIG’s work in determining whether the internal controls over

programmatic operations were adequate.

These longstanding, pervasive material weakness issues present significant risks at CNCS. An 

effective internal controls program should include coordination and collaboration agency-wide

acrossfunctional offices and leadership to (1) properly assign responsibility and monitor progress

and (2) timely communicate quality information so that agency management can make informed

decision about risks and resources.

There was lack of communication and coordination between the Office of the Chief Risk Officer

(OCRO) and Accounting and Financial Management Services (AFMS) on identifying risks that 

could impact the financial reporting process and assessing risks related to the use of service

3 GAO Report GAO-17-90, Grants Management: Monitoring Efforts by Corporation for National and Community

Service Could Be Improved, March 21, 2017 4 CNCS-OIG Semiannual Report To Congress 18-01, Appendix A Unimplemented Recommendations. 5 CNCS’s internal controls assessment of grant monitoring currently focuses on confirming grant compliance (e.g.,

timeliness and completeness of documentation) rather than assessing effectiveness of grant management.

7

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

organizations. Although the OCRO conducted its entity-level assessment in FY 2018, it has

decided to perform the assessment on a rotational basis in future years. Forgoing an annual

entity-level control assessment may leave CNCS unaware of new internal control weaknesses and 

delay its ability to identify and mitigate agency-wide risks. 

OMB Circular No. A-123 requires management to continuously monitor, assess, and improve the

effectiveness of internal control associated with those internal control objectives identified as

part of their risk profile to support the annual assessment and report on internal control as

required by the FMFIA.6 It also requires management to regularly review risk to ascertain

whether the risk profile has changed and gain assurance that risk management is effective or

whether further action is necessary. Management must have processes in place to assess

whether risks continue to exist, new risks have emerged and the impact of those risksin providing

assurance on the effectiveness of controls.7

In summary, CNCS does not have a reliable, mature internal control program sufficient to comply

with government-wide standards.

We recommend that CNCS:

1. Establish responsibility and accountability to ensure that CNCS complies with OMB Circular

No. A-123 and holds appropriate CNCS management officials accountable in supporting the

internal control assessment process.

2. Engage in periodic meetings with the functional offices to identify risks associated with

significant financial statement line items and gather the necessary information to make

informed decisions as part of the risk assessment process. Specifically, OCRO should:

a. Stay informed regarding new and open audit recommendationsto ensure that key

operational and financial control deficiencies are identified, and those controls are

documented in CNCS’s business process narratives and risk control matrices.

b. Actively participate in ongoing financial statement audit status meetings and stay

informed on identified risks to ensure that functional offices are held accountable

and addresses those specific risks through the assurance statement preparation

process.

c. Develop a process and criteria for functional offices to follow when they review

and assessservice organization reports and incorporate the results in their annual

assurance statements. The process should include assigning responsibility for

each service organization report to applicable functional offices, a timeline for

6 OMB Circular No. A-123, Section IV. 7 OMB Circular No. A-123, Section II. 

8

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

completion, and meetingsto discusstheir assessment results priorto finalizing the

assurance statements. The assessment should also include consideration of any

complimentary user controls and documentation of the existence and operating

effectiveness of such user controls. Guidance should be provided to functional

offices on how to respond to service organization reports with modified opinion

and exceptions related to control objectives.

3. Continue the process to develop and update all business process narratives with realistic

timeline and monitor status to meet completion milestones. All documented business

processshould be accurate and reflect the actual business practices. Key controlsshould also

be properly identified in the narratives.

4. Develop guidance and best practices for functional offices for completing assurance

statements. Guidance should clearly identify what would constitute an adequate internal

control assessment from which the functional offices can rely on to submit an unmodified

assurance statement. Guidance should also be provided to functional offices with clear

definitions and examples on control deficiency,significant deficiency, material weakness; and

when a modified or no assurance statement should be provided.

5. Require functional offices to provide supporting documents for their assurance statements.

OCRO should establish quality control reviews of the support for function offices’ assurance

statements to ensure that they are complete, and the functional offices address business

cycles, financial statement line items and systems under their purview of responsibility to

ensure consistency with the assurance statements.

6. Update definitions from the assurance statement guidance as to what constitutes a modified

and no assurance statement.

2. Financial System and Reporting (modified repeat material weakness)

CNCS’s financial reporting was hindered by limitations in its financial system (Momentum) and

the timing and difficulties arising from an upgrade, accounting staff turnover, and inadequate

internal controls. The combination of these weaknesses prevented CNCS from providing

auditable financial statements. These limitations contributed to an environment that forced

CNCS to adopt temporary fixes rather than complete solutions to address pervasive longstanding

issues.

Effective controls in financial reporting are critical to ensure that CNCS’s financial information is

adequate, accurate and reliable, so that Congress and the general public can hold CNCS

accountable for the expenditure of taxpayers’ money. CNCS’s financial reporting internal

controls were either not properly designed or not implemented effectively. Repeated financial

reporting issues from the prior year continued in FY 2018, which resulted in unreliable financial 

information, including the failure to prepare complete and accurate interim financialstatements.

9

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

Moreover, CNCS’s internal control program failed to ensure that adequate corrective actions

were developed and timely executed. CNCS lacked the staff to accomplish these goals.

Consequently, we see little or no progressin addressing most of the financialreporting conditions

from the prior year. Resolutions of financial reporting internal control issues were further

complicated by turnover of key accounting personnel. For example, the Director of AFMS position

was vacant for the majority of the fiscal year, with multiple key accounting staff resigning from

CNCS during FY 2018. Overall, CNCS’s control environment did not demonstrate the required

discipline to present reliable and auditable financial statements. As a result, CNCS’s financial

statements were deemed unauditable again in FY 2018.

Our audit procedures found the continuation of problematic conditions from the prior year audit

and uncovered new conditions. We categorize these issues as follows:

a. Financial statements not prepared in accordance with generally accepted accounting

principles (GAAP);

b. Lack of internal controls related to the preparation and review of CNCS’s financial

accounting and reporting process;

c. Systemic deficiencies in the core financial system; and

d. Improper design of internal controls for the use of Standard Vouchers (SVs).

OMB Circular No. A-123 requires agency management to establish and maintain internal controls

to achieve the objectives of effective and efficient operations, reliable financial reporting, and 

compliance with applicable laws and regulations.

A. Financial statements not prepared in accordance with GAAP

CNCS’s June 30, 2018 (interim) financial statements were not completed and prepared in

accordance with GAAP. Certain line items, statements, and notes were either not prepared or

were not updated until the year-end. For example:

• The balances of two significant line items “Property and Equipment” and “Accounts

Payable” (accrual portion) on the Balance Sheet were misstated because CNCS did not

update these balances until year-end. At the interim reporting periods, CNCS did not

record capitalization costs nor accrue expenses and payable for goods and services

received but not yet paid.

• CNCS did not properly report its program expenses on the Statement of Net Cost because

indirect costs allocation among each CNCS program was only performed at year-end.

• CNCS did not prepare the National Service Trust Fund financial statements and

accompanying notes at interim periods.

10

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

Preparing complete and accurate financial statements and notes at interim financial reporting

periods would allow CNCS to timely detect and correct errors and to assess the effectiveness of

the financial reporting process and controls. Limiting financial reporting procedures and key

controls to year-end increases the risk of material misstatements and omissions of required 

information from the financial statements and notes.

We recommend that CNCS:

7. Record transactions in accordance with GAAP.

8. Prepare a complete set of CNCS and National Service Trust Fund interim financial statements

and notes in accordance with GAAP.

9. Implement effective internal controls to ensure interim financial statements and notes are

properly reviewed and approved by appropriate CNCS staff and account balances are

accurate as of and through the reporting periods.

B. Lack of internal controlsrelated to the preparation and review of CNCS’sfinancial accounting

reporting process

B1. Internal control deficiencies in the preparation of the financial statements and review of

the trial balance

CNCS’s monthly trial balance review was incomplete and ineffective. Staff did not properly

research, follow up and document explanations for known and recurring account balance

differences, including abnormal account balances. The analysis also did not include a complete

budgetary-to-proprietary analysis (tie point) to assess the reasonableness of related accounts

and balances. The Treasury Financial Manual (TFM) United States Standard General Ledger

(USSGL) standard accounting entries require, in most transactions, the recording of both

budgetary and proprietary accounts for a transaction. Therefore, tie points show the

relationships of these related accounts that are reported in different basic financial statements.

This high-level analysis allows management to detect anomalies in balances.

Moreover, CNCS did not perform a complete, accurate and up-to-date fluctuation analysis of the

June 30, 2018 account balances. CNCS did not document the explanations forsignificant balance

fluctuations or the explanations offered were so generic that they did not address the specific

nature of the transactions, change in operations or trends sufficient to show the root causes of

the balance fluctuations. CNCS also did not document financial account balance fluctuation 

expectations based on its operating environment and compare those expectations to the

identified significant balance fluctuations for reasonableness or unexpected change. In some

cases, the balances used for the fluctuation analysis differed from the balances on the financial

statements.

11

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

Other financial reporting internal control deficiencies include an incomplete financial statement

review checklist; lack of reconciliation between the Combined Statement of Budgetary Resources

and the Report on Budget Execution and Budgetary Resources (SF-133); incomplete general

ledger and transaction details; and inadequate support to validate transaction details and 

balances for significant financial statement line items.

B2. The cost allocation process was not documented and properly supported.

CNCS does not have adequate policies and procedures for the allocation of indirect costs among

its programs. CNCS was unable to demonstrate how it processed indirect costs in Momentum

and how it derived and calculated costs allocation percentagesto each program and subprogram.

The key individual responsible for the cost allocation process was a Momentum developer

contractor who left CNCS in September 2018 right before the year-end financial reporting

process.

B3. CNCS did not review legacy transaction codes with balances for validity

CNCS did not perform the necessary research to determine whetherlongstanding balancesin the

“TJ” (used to report Trust Fund commitments and obligations) and “JV” (journal voucher)

document types represent valid undelivered orders. Document types “TJ” and “JV” were legacy

transaction codes that CNCS discontinued in FY 2007 and FY 2011, respectively. The June 30,

2018 unliquidated order report showed:

• A net balance of approximately $8.6 million associated with document type “TJ,” the

obligation for which was initially recorded in FY 2007; and

• A net balance of more than $6 million associated with document type “JV,” dating to FY

2004.

We identified these balances from our initial review during last year’s audit. They remained

unchanged at June 30, 2018.

We recommend that CNCS:

10. Develop comprehensive policies and procedures for the financial statements preparation

process and related internal controls. The policies and procedures should address, among

other subjects:

a. The process to determine and document CNCS’s balance fluctuation expectations

should be based on a combination of internal and external operating factors, and

program and financial relevant information available.

b. The materiality threshold used to determine significant balance fluctuations that

require further research should be more conservative than that used by external

auditors and consistent with the materiality thresholds used by the OCRO (as part

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

of the OCRO’s OMB Circular No. A-123 assessment) to ensure integration and

consistency between AFMS and OCRO.

c. Detailed process to research significant balance fluctuations. CNCS should

research and explain all significant balance fluctuations at the account and

transaction level. Maintain and have the supporting documentation readily

available.

d. Review balance differences between proprietary and budgetary accounts.

e. Research and retain supporting documents required for any identified account

balance differences derived from its abnormal balance review or the tie point

analysis.

f. Address fatal and non-fatal Government wide Treasury Account Symbol Trial

Balance (GTAS) edit failures.

g. Address all balance differences and retain supporting documentation of related

research.

h. Complete the GAO Financial Audit Manual Checklist section 2010, Checklist for

Federal Accounting, and section 2020, Checklist for Federal Reporting and

Disclosures.

11. Ensure its balance fluctuation analysis is complete, comprehensive, supported and

substantive to allow management to detect accounting errors or evaluate reasonableness of

balances.

12. Prepare a complete set of quarterly financial statements and notes for both CNCS and

National Service Trust Fund.

13. Creates a monthly/quarterly accounting and financial reporting operational checklist with

assigned responsibility for each AFMS staff. The AFMS Director and the Chief Financial Officer

(CFO) should review the checklist to ensure all tasks are completed timely.

14. Revise its current cost allocation memorandum titled “Corporation for National and

Community Service Financial Reporting Cost Allocation” to describe in detail the process for

allocating indirect costs allocation among CNCS programs, including indirect cost allocation

methodology, basis of allocation, assumptions, sources of data, allocation period timeline,

and review process.

15. Review and research the balances for discontinued document types, such as “TJ” and “JV” to

determine their validity and correct them accordingly. Document and maintain support for

any accounting adjustments made to correct the balances.

16. Identify any additional unused document types and transaction types and related balances

for possible liquidation.

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

17. Work with the Momentum support team to remove any document types that are no longer

used.

C. Systematic deficiencies in the core financial system

C.1 Non-compliance with OMB Circular No. A-11: CNCS did not use object class codes to record

certain transactions

CNCS’s financial system was not properly set up to record transactions with object class (OC)

codes. Our analysis of the CNCS general ledger history report identified pervasive errors such as

transactions without OC codes or with inaccurate OC codes. The financial system set up was also

not in compliance with OMB Circular No. A-11, Preparing, Submitting, and Executing the Budget,

which requires OC codes be associated with the USSGL transactions. As a result, considerable

research is needed to correct the OC reporting of many transactions related to undelivered 

orders or delivered orders budgetary accounts. To compensate for the system limitation, CNCS

uses general ledger accounts and sub-accounts with associated document type and transaction 

type codes to classify transactions for reporting. However, this time-consuming, manual effort

could increase the risks of financial reporting errors. This deficiency had also negatively impacted

CNCS’s compliance with the statutory requirement of the Digital Accountability and Transparency

Act (DATA Act) reporting during FY 2017.

8

C.2 CNCS failed to timely submit required external reports due to financial system upgrade

issues

CNCS executed an upgrade to its financial system on June 25, 2018, immediately before the

quarter-end financial reporting close-out period. CNCS accepted at face value the financial

system contractor’s assurances that the upgrade would have no operational impact and did not

independently assess or anticipate the risks and impact of the system upgrade on CNCS’s

operations and financial reporting. CNCS also did not prepare contingency measures to mitigate

any negative impact from the financial system upgrade to its financial reporting. This upgrade

caused various accounting system issues, including the delays in certifying three Treasury

Account Symbols (TAS) in U.S. Treasury’s GTAS file submission.

We recommend that CNCS:

18. Develop a plan to upgrade itsfinancialsystem to includeOC codes which should be associated

with USSGL in accordance with OMB Circular No. A-11.

8 OIG Report 18-05: Performance Audit of the Corporation for National and Community Service’s Compliance under

the Digital Accountability and Transparency Act of 2014

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19. Provide mandatory training to CNCS accounting staff on the proper use of OC, sub general

ledger accounts, and document/transaction types on all obligation and expense transactions.

20. Continue to evaluate and correct, if necessary, any ongoing negative impact of the financial

system upgrade on financial reporting.

21. Identify and collect feedback from all stakeholders to ensure all concerns and risks on the

system upgrade are addressed and risks are mitigated.

22. Developmilestonesfor the complete implementation of the resolutionsrelated to the system

upgrade issues.

D. Improper design of internal controls for the use of SVs

CNCS overuses SVs to work around limitations to its accounting system and ineffective financial

reporting internal controls. CNCS uses SVs to address significant recurring financial reporting

issues across multiple funds, instead of resolving the underlying causes of the problems that the

SVs are intended to circumvent. In many cases, incorrect SVs were used to correct other SVs

which led to misstatements in the financial statements. Moreover, substantial SV transactions’

definition or posting logic are outdated, inaccurate or inconsistent with the latest USSGL

guidance. As of June 30, 2018, CNCS recorded approximately $4.4 billion in absolute value

through SVs. We also identified control deficiencies of the use of SVs, such as untimely approval;

lack of supporting documentation; generic SV descriptions without specific justification of its

usage; and lack of policies and procedures over the use of SVs. This over-reliance, incorrect usage 

and inaccurate SVs create a high risk of material misstatements in the financial statements.

We recommend that CNCS:

23. Work with the financial system developer to identify and remediate the causes that give rise

to the current excessive reliance on SVs.

24. As part of the process to correct long-standing financial system configuration issues, examine

the document types in the transaction definitions against the USSGL and correct the

transaction posting logic.

25. Track the outstanding balances with system configuration issues until their full liquidation.

26. Document and retain the results of actions taken for recommendations above, including the

final decisions and solutions to resolve the system issue.

27. Develop and implement policies and procedures for the SV process that include:

a. tracking the sequence of SVs for completeness;

b. appropriate use of SVs;

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c. determining and maintaining relevant documentation to support each SV;

d. use of specific and accurate SV descriptions;

e. timely review and approval of SVs; and

f. reviewing and approving all SVs for accuracy and propriety.

3. Trust Fund Unpaid Obligations (modified repeat material weakness)

CNCS continued to significantly overstate its Trust obligation balance and obligated substantially

more than is necessary to pay its outstanding liabilities. As of June 30, 2018, CNCS had not

adjusted downward the obligations related to expired AmeriCorps education awards and has not

done so since the Trust Fund’s inception in 1994. CNCS also did not separately track and record

transactionsfor upward adjustment to prior year unpaid obligations. In addition, CNCS obligated

all interest received on the Trust Fund’s investment upon receipt, without adequate justification.

The interest revenue should have been recorded as unobligated budgetary resources in 

accordance with OMB Circular No. A-11. As a result, CNCS has obligated far more than it actually

owes for unpaid education awards.

In our review of the relationship between Trust unpaid obligations and the service award liability

on the financial statement, we noted significant variances. CNCS could not provide adequate

transaction details and explanations to support and account for these differences between Trust

unpaid obligations and service award liability, as shown in the table below.

6/30/2018

$ in

thousands

9/30/2017

$ in

thousands

6/30/2017

$ in

Financial Statement Line Item thousands

Unpaid Obligations, End of Period 

(per Statement of Budgetary Resources) $672,871 $669,082 $616,853

Less: Service Award Liability (per Balance

Sheet) $351,912 $397,631 $391,499

Difference $320,959 $271,451 $225,354

The huge disparity of balances between the Trust unpaid obligations and service award liability

continued to grow. CNCS was unable to provide a detailed schedule of the undelivered orders as

of June 30, 2018,so we could validate the unpaid obligations balance. These unsupported unpaid

obligationsinclude amounts for AmeriCorps memberslotsthat were never filled, interest earned 

on Trust investments which was obligated without adequate justification, and expired awards

that no longer represent liabilities. Those amounts should be de-obligated from the Trust. We 

identified each of these issues in the prior year audit, but they remained unresolved at June 30,

2018.

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CNCS began to implement a new methodology to estimate Trust liability and obligation balances

in FY 2018. The new process was not completed and implementation did not begin until after

the end of the fiscal year. CNCS advised us orally that it intended to use the new methodology

to adjust the Trust obligation balance as of September 30, 2018 to account for the above issues

identified in last year’s audit. However, the methodology wasin itsinfantstage and had not been

finalized and vetted. The analysis and recordation of an adjustment was described by CNCS as

the first phase of a five-phase implementation process described in a draft “Corrective Action

Plan” (provided to usin August 2018) to address the prior year material weaknessesin Trust Fund

Unpaid Obligations and Trust Service Award Liability. We noted, however, that the new

methodology did not include development or implementation of any internal controls related to

the new Trust obligation process. CNCS continued to make changes to the proposed new

methodology throughout the audit period, leaving us unable to perform adequate audit

procedures to assess the completeness, accuracy,reasonableness, and integrity of eitherthe new

methodology itself or the resulting adjustments to the Trust obligation balance as of the yearend. 

We recommend that CNCS:

28. Discontinue obligating interest revenue automatically upon receipt and deobligate amounts

representing interest previously obligated, or document the authority to automatically

obligate interest earned.

29. Document and implement policies and procedures to include the following:

a. review obligations to verify that amounts, timeframe (i.e., grant dates are

correctly reflected in the obligation) and age are accurately reflected in the status

of the obligation to confirm their validity;

b. ensure obligations are sufficiently supported (i.e., by documentary evidence);

c. reconcile obligations to source documents (such as grant agreements); and

d. perform complete reconciliations of all outstanding obligations monthly, and

ensure any discrepancies identified are promptly researched and resolved.

30. Implement a complete and correct mapping of the accounting transactions (such as

downward adjustments to the obligations) incurred for the Trust Fund to the proper USSGL

accounts and financialstatementline items, for both the budgetary and proprietary accounts.

31. Finalize the new methodology on Trust obligations.

32. Document a complete and comprehensive policies, procedures and process narratives

related to the National Service Trust’s accounting and financial reporting, including obligation

recording and reporting.

33. Ensure that the policies and procedures for the new methodology include properly designed

internal control activities, such as the preparation of the estimate, periodic testing and

periodic updates to the methodology.

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FY 2018 Annual Management Report 

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4. Trust Service Award Liability (TSAL) (modified repeat material weakness)

TSAL model deficiencies and lack of quality controls resulting in input and calculation errors in

TSAL

The TSAL of $304 million (unaudited) is the largest liability on CNCS’s financial statements as of

September 30, 2018. CNCS developed a model to estimate the anticipated service awards to be 

paid by the Trust. The calculation of this liability is based on a variety of factors, such as member

enrollment levels, education award earning statistics, usage patterns and interest forbearance.

As mentioned above, CNCS’s new Trust service liability and obligation estimation methodology

was not in use until after September 30, 2018. Therefore, the serious deficiencies that we

identified in the TSAL model in FY 2017 audit continued through June 30, 2018 and thereafter.

Recurring issues included calculation errors and lack of quality controls that significantly

impacted the accuracy of the reported liability.

We identified the following deficiencies of the TSAL model: (a) CNCS failed to prevent, detect and

correct material calculation errors on the June 30, 2018 estimated Trustservice liability; (b) CNCS

estimates its outstanding liability for education awards by means of an Excel-based spreadsheet,

which is prone to human errors and had security deficiencies arising from inadequate physical 

access and version controls; (c) CNCS used a manual cut-and-paste process to transfer data from

other system reports to the TSAL model, with ability to override assumptions without adequate

justification or documentation; (d) CNCS did not use discount ratesin its TSAL calculation; and (e)

inadequate documentation of the key assumptions, procedures and controls, sources and

validation of data. As with the Trust Fund obligation methodology, we were unable to perform

adequate audit procedures to review the TSAL balance and the new TSAL model.

We recommend that CNCS:

34. Review the prior year recommendations provided and ensure that any applicable considered

and incorporated in the new Trust Obligations and Liability model.

35. Develop a succession plan to ensure the required expertise is available in the event of

employee turnover. Such succession planning is key to helping CNCS continue achieving its

internal and external reporting objectives. CNCS needs to:

a. Train, mentor, and work to retain qualified employees;

b. Institute continued cross-training so that knowledge of the model will reside with

multiple staff rather than with one person; and

c. Implement a peer review process to carry out the necessary quality control

reviews of the TSAL model.

36. Strengthen controls to ensure the TSAL modelling is performed by trained personnel to:

a. Conduct detailed analysis and validation of data sources;

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b. Review and ensure the reasonableness of assumptions used and document the

rationale behind these assumptions;

c. Consider changes in conditions or programs that require further research and

analysis. Update the assumptions when necessary;

d. Compare estimates with subsequent results to assess the reliability of the

assumptions and data used to develop estimates.

37. Conduct a detailed study to determine the historical awards granted to members by duration

and by program year, and use the results of that study to adjust the calculation of the

Education Awards Earning Percentage.

38. Revise and update policies, key modelling assumptions, SOPs, and business process narratives

relevant to the Trust Fund’s accounting and financial reporting of education awards.

39. Assess the need and document management’s position regarding the discounting factors for

the TSAL in accordance with applicable Federal Accounting Standards Advisory Board’s

standards.

5. Grants Accrual Payable and Advances (modified repeat material weakness)

CNCS changed its grant accrual methodology to record accrued expenses and liability during third 

quarter of FY 2018 using the calculated disbursement estimate and the “incurred but not

reported” (IBNR) cost estimate provided by its service provider (Department of Health and

Human Service or HHS). These amounts represent the estimated liability for costs already

incurred by the grantees but will be reported in the following quarter, and the estimated IBNR

costs. Prior to this change, CNCS did not record IBNR, as we reported in the FY 2017 audit. 

Advances to grantees are offset against the estimated accrued liability.

The grant accruals are estimates. Per the Federal Accounting Standards Advisory Board, Accrual

Estimatesfor Grant Programs, Federal Financial Accounting Technical Release 12, a Federal grant

making entity must demonstrate the reliability of its grant accrual estimates. CNCS adopted

HHS’s IBNR figure without (a) explaining or developing adequate analysis to support how the

HHS’s assumptions applied to CNCS’s grants, and (b) procedures to monitor and validate the

accrual after the end of the reporting period.

When management’s key assumptions are not validated and properly documented based on

historical data analysis and grantees’ actual spending pattern, it increases the risk of errors and

ultimately may lead to misstatements in CNCS’s grant accrual and related expenses reported in

its financial statements.

We recommend that CNCS:

40. Update and implement policies and procedures for the accrual and validation of grant

advances, IBNR, and payable estimates at the grant level. Such documentation should include

management’s:

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a. review process of its key assumptions based on relevant and reliable data;

b. validation process for all program elements in the estimation process and over a

few years to show a trend of the estimates. The validation process provides

indication whether the resulting amounts are materially consistent with grantees’

drawdown and spending patterns;

c. documentation of the research, review and conclusions for unusual fluctuation

between the accrual and the actual performance; and

d. documentation of how the advances versus grant accrual calculations are used to

arrive at the Grants Payable and Advances to Other financial statement line items.

41. Coordinate with the program and grant officers to gather and analyze key grant programs’

(AmeriCorps State and National and Senior Corps) historical data and the grantees’ spending

pattern to develop factors relevant for grant accrual estimation.

6. Undelivered Orders (UDO) and Accounts Payable (AP) – Procurement (new material

weakness)

CNCS’s Office of Procurement and AFMS did not have adequate internal controls to ensure the

accuracy of obligated balances and execute de-obligations over stale and invalid obligations

related to contracts and purchase orders. We tested 26 undelivered orders (UDOs) at June 30,

2018, and found that six of them, totaling more than $2 million, were stale or invalid. CNCS

concurred that these amounts should have been deobligated.

We also found that CNCS was unable to provide contracts/purchase orders/modifications (or

modifications without Contracting Officer’s approval)/invoices of selected samples to support

contract and expense amountsrecorded in itsfinancialsystem. We identified approximately $3.5

million unexplained procurement UDO balance differences between the financialsystem and our

recalculations. Furthermore, we identified errors in CNCS’s accounting posting logic in its

financial system that led to misstatements and abnormal balances in the UDO balance. CNCS

was unable to provide a response regarding the cause of these errors.

For nearly half (12 of 26) of ourJune 30, 2018 procurementsamples, we found that services were 

performed prior to the financial reporting period (June 30, 2018). Since CNCS only accrues

accounts payable at fiscal year-end, the accounts payable balance at June 30, 2018 was

understated by at least $2 million.

We recommend that CNCS:

42. Centralize storage of all procurement documents in contract files and maintain them

electronically.

43. Strengthen internal control to ensure procurement documents are properly approved and

retained.

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44. Analyze procurement UDO balances quarterly to verify that balances are still valid for those

without financial activities for an extended period.

45. Research, resolve and document the disposition of any abnormal UDO transactions/balances.

46. Correct the financial system’s posting logic to ensure all future transactions are recorded

properly in accordance with USSGL.

47. Develop, document and implement an accounts payable accrual methodology to include the

recognition and reporting of the IBNR. The methodology should also document key controls

related to review and approval process of the accrual estimation.

48. Conduct validation assessment of amounts accrued for the IBNR on a periodic basis. As part

of the validation, CNCS should consider the following:

a. Subsequent activities against the amount estimated to determine the level of

precision in the estimation;

b. Trend the validation results and adjust the IBNR estimation process to address any

recurring significant fluctuations; and

c. Update the IBNR estimation process as necessary to reflect changes in payment

patterns.

7. Property and Equipment (new material weakness)

CNCS did not timely capitalize its Internal Use Software (IUS) at interim financial reporting

periods. As a result, the IUS balance of $13.8 million as of June 30, 2018 was the same as of

September 30, 2017. The June 30, 2018 balance was not adjusted for the capitalizable costs

incurred of $506 thousand that we identified in FY 2017. We also noted that IUS of nearly $5 

million expensed as of June 30, 2018 should have been capitalized. CNCS only records

depreciation on a quarterly basis, and records and/or reclassifies capitalizable costs from

expenses at year-end only. In addition, CNCS’s Office of Information Technology and AFMS were

not able to provide a schedule of all capitalized costs incurred (direct cost, indirect cost, direct

labor and indirect labor) on a significant IUS contract (the new grant management system)

awarded on September 26, 2014. Federal accounting standards require agencies to capitalize

material internal costs associated with contractor-developed software.

We recommend that CNCS:

49. Analyze contractor-developed-software costs that were expensed but not capitalized in

accordance with accounting standards. CNCS should record appropriate adjustments to

correct the IUS balance based on its analysis.

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FY 2018 Annual Management Report 

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50. Update CNCS policy to recognize and record capitalized costs during the period they are

incurred.

8. Undelivered Orders – Grants (new material weakness)

Grant UDOs are outstanding grant awards obligations. Our testing of grant UDOs as of June 30,

2018 noted the following exceptions from 172 samples.

A. The total grant award amount recorded in the financial system did not agree with the most

recent Notice of Grant Award (NGA)

For seven grants sampled, CNCS’s financial system (Momentum) recorded awards totaling $18

million, while the most recent Notice of Grant Award (NGA) reported a total of $15 million. The

NGA, generated and retained in CNCS’s grant management system eGrants, is the supporting

documentation for processing grant award obligation or de-obligation. CNCS did not provide any

explanation for the discrepancy between Momentum and the NGA. In addition, we also noted

the following concerning those differences:

• There is no NGA to support the obligation that occurred in Momentum;

• There is no NGA to support the de-obligation that occurred in Momentum; and

• The obligation occurred within Momentum before the Senior Grants Officer approved the

NGA.

We are unable to rely on the grant obligation amounts in Momentum since Momentum does not

consistently agree with the NGA information from eGrants, which serves asthe official obligation 

document. Unresolved differences of grant award amounts between the official grant award

documents and the financial system of record poses as significant risk of misstated obligation

balances.

B. Grant expenditures from the Payment Management System (PMS) did not agree with the

expenditures recorded in the financial system

Expenditures for 19 grants reported in the PMS (grant drawdown and expenditure reporting

system managed by HHS) did not reconcile to the grant expenditures recorded in Momentum as

of June 30, 2018. The expenditures reported from PMS is $2.6 million ($3.8 million in absolute

value) more than Momentum.

Based on the controls in place, there may be as much as a two-week delay of data exchange 

between PMS and Momentum. However, we could not determine whether the timing lapse in

fact accounts for some or all of the difference between PMS and Momentum as CNCS did not

provide any explanations. Consequently, potential misstatement in obligation balances could

occur. 

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C. Grants were not closed-out timely

Two grants remained open for more than one year after the end of their period of performance.

In accordance with Uniform Grant Guidance, CNCS is required to close out the grant no later than

one year after receipt and acceptance of all required final reports, which are due within 90 days

after the end of the period of performance. There was no evidence from the grant files showing 

that CNCS had granted an extension to the grantees. As a result, these two grants with UDO

balances of approximately $1.3 million overstated obligations balance and should have been 

closed out with funds de-obligated.

D. Transaction code used to record grant expenditures is not consistent with USSGL

The transaction code used by CNCS to record grant expenditures for 133 grant samples were not

consistent with the USSGL transaction codes. CNCS’s transaction code erroneously obligates

funds that causes duplicated obligations by recording incorrect USSGL accounts. As a result, a

subsequent transaction is required to eliminate the duplicate obligation recorded.

Instead of correcting CNCS’s transaction code logic for recording grant expenditures in

accordance with the USSGL guidance, CNCS has chosen to continue to make manual corrections.

This manual correction process is susceptible to human error and is time-consuming.

We recommend that CNCS:

51. Determine the root causes and resolve discrepancies in the grant award amounts recorded

in the NGA in eGrants and in Momentum to preventsuch differencesfrom occurring in future.

52. Determine the root causes and resolve expenditure differences between PMS and

Momentum.

53. Strengthen controls around the review of expired grant obligations by ensuring that:

a. All financial, performance and other required reports are submitted no later than

90 calendar days after the end date of the period of performance.

b. Grants are promptly closed after submission of required reports and any unspent

amounts are promptly deobligated.

c. Document justifications for all required reports submission extensions granted to

the grantee.

54. Update the CNCS transaction code posting logic for recording grant expenditures to comply

with the USSGL guidance.

9. Recoveries of Prior Year Obligations (Recoveries) (new material weakness)

OMB Circular No. A-11 states that a grant obligation is reported at the time the grantee is

awarded the grant and is liquidated when the payment is made to the grantee. To the extent 

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FY 2018 Annual Management Report 

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that a grant in a previous year is no longer valid, agency will record a recovery of prior year

obligations. CNCS was unable to provide any documentation, including executed contract

amendments or grant close-out letters, to support about one-third of our June 30, 2018 

Recoveries samples. A CNCS grant officer explained that an eGrants system issue prevented 

generation of grant close-out letter. Moreover, we found that Recoveries were not recorded

correctly in the financial system. Due to the magnitude of potential errors in our Recoveries

sample population, we are unable to rely on our testing results to statistically project a

reasonable potential misstatement amount.

We recommend that CNCS:

55. Ensure grant officers validate Recoveries balance to supporting documentation. Also, ensure

future Recoveries transactions recorded in Momentum are adequately supported and

documented.

56. Require the program and grant officers who perform the grant close-out in Momentum to

certify that all required grantee information has been received and reviewed; and any final

notices or changesto grant funding have been communicated and accepted by grantees. The

process should require a second-level of review before grants are closed-out. All supporting

documents should also be made readily available for review.

57. Adhere to the accounting definition and guidance issued by OMB and Treasury for recording

Recoveries and updates CNCS’s financial reporting policy accordingly.

10. Other Liabilities (new material weakness)

The financial statement line item Other Liabilities represents amounts owed but not yet paid,

such as payroll and benefits, AmeriCorps VISTA stipends, unreimbursed Federal Employees’

Compensation Act (FECA) claims, other unfunded employment related liability, liability for

non-fiduciary deposit funds and undeposited collections, and accounts payable canceled

appropriations. CNCS was unable to provide any supporting documentation for

approximately $14 million of the $20 million balance reported as of June 30, 2018. In

addition, we found that CNCS calculated but failed to record $1.5 million of member payroll

liability at June 30, 2018.

We recommend that CNCS:

58. Reconcile the amounts reported in Other Liabilities to supporting documents to verify that

Other Liabilities is supported by valid transactions and properly classified.

59. Develop a financial reporting checklist to ensure completeness and recording of all

transactions.

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FY 2018 Annual Management Report 

EXHIBIT B

Significant Deficiency

1. Information Technology Security Controls (modified repeat significant deficiency)

CNCS relies on information technology (IT) systems to initiate, authorize, record, process,

summarize and report financial transactions in the preparation of its financial statements.

Internal controls over these operations are essential to ensure the integrity, confidentiality and 

reliability of critical data while reducing the risk of errors, fraud and other illegal acts.

To balance high levels of service and reduce costs, CNCS’s Office of Information Technology has

outsourced the operation, maintenance and support of most of its IT systems. Outsourcing

introduces special considerations and risks regarding the protection of information and

information systems. Despite the outsourcing of IT systems, CNCS by law retains responsibility

for complying with the requirements of the Federal Information Security Modernization Act

(FISMA) and security control implementation.

Ourreview of IT controls covered general and selected business process application controls both

at the enterprise and at the facility levels, the Field Financial Management Center (FFMC),

National Civilian Community Corps (NCCC) campuses and State Offices. Our current year audit

identified security weaknesses that were corrected for certain control activities. Examples of 

CNCS improvements in its IT control environment include: enforcing the CNCS’s account

management procedures for disabling inactive accounts, tracking known security control

weaknesses in the Plan of Action and Milestones (POA&Ms), and updating the Continuity of 

Operations Plan based on revisions to the Business Impact Analysis and Disaster Recovery Plan.

While CNCS has taken some steps to remediate previously identified information security

weaknesses, its efforts has focused on developing policies and procedures and system security

documentation. These are necessary and foundational, but they are of limited value unless they

are supported by consistent implementation and monitoring ofsecurity controls. In addition, we

identified new and continued control weaknesses in the information security program that need

to be addressed, most importantly pertaining to access controls, configuration management and

system change controls, logging and monitoring controls, organization-wide and information 

system risk management, security authorization documentation, personnel screening, and 

physical access controls. Specifically, we identified enterprise and facility-level findings for each

of the following domains:

Configuration Management

• Vulnerabilities related to patch management, configuration management, and unsupported

software exposed the CNCS headquarters and field office networks to critical and high

severity vulnerabilities. The average number of vulnerabilities per host scanned increased

from last year.

CNCS’s vulnerability management program needs to improve to effectively identify, monitor

and remediate known vulnerabilities to reduce the risk of security breaches. This includes

monitoring and recording actions taken by the General Support System (GSS) contractor to

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ensure vulnerability remediation for network devices and servers is addressed or the

exposure to vulnerabilities is minimized (Repeat)

• CNCS documented standard baseline configurations only for its Microsoft Windows servers,

but not for its databases, network devices and Web browsers. In addition, certain Microsoft

Windows production servers did not have any standard baseline configurationsimplemented

and CNCS was not monitoring for deviations from the baselines. (Modified Repeat)

• CNCS did not monitor the Momentum configuration settings to ensure they were in

compliance with policy. Specifically, the configuration settings for disabling Momentum user

accounts and session timeout were not in compliance with the CNCS configuration policy.

(New)

• Change management policies and procedures for testing network changes were not

consistently implemented. (Repeat)

Access Control

• Disabling accounts for separated users were not fully applied for an application managed by

Microsoft Active Directory (AD). Although network accounts were disabled, accounts were

not removed from the AD Organizational Unit.

9 Access to the application is managed through

AD; therefore, if the AD accounts were re-enabled, access to the application would be

maintained. (Modified Repeat)

• CNCS did not implement Personal Identification Verification multifactor authentication for

local and network access for privileged users and for network access for non-privileged users.

(Repeat)

• CNCS did not capture the Momentum Oracle security logs into its event correlation tool used

for audit log review, analysis and reporting. The event and trend analysis to investigate

security events is required by National Institute of Standards and Technology (NIST) for

information systems categorized as moderate. (Repeat)

• Management at two field offices did not ensure adequate physical access controls. (Modified

Repeat)

• Access control issues reported last year related to mobile devices and protection of

personally identifiable information at CNCS field offices were not remediated.10 (Repeat)

9 An Organizational Unit is a subdivision in Active Directory to hold users, groups, and computers with designated

Group Policy settings and account permissions. 10 Although we did not revisit CNCS field offices where we originally found these issues in FY 2017, CNCS confirmed

that it had not completed the related corrective actions. We did not find similar issues from the field offices we

visited during FY 2018.

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FY 2018 Annual Management Report 

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Significant Deficiency

Security Management

• The new Authorizing Official (AO) for CNCS’s General Support System did not sign a new

authorization decision document when the AO assumed the new role. Based on review of

the current authorization decision document, authorization package and updated documents

related to continuous monitoring activities, the new AO did not explicitly accept the known

risk and formally transfer responsibility and accountability for the GSS as required by NIST.

(New)

• CNCS did not timely provide a risk register to record identified risks at the mission and

business process level, or Tier 2, as defined by the National Institute of Standards and

Technology (NIST). Additionally, although the risk register at the information system level,

Tier 3, has been incorporated in the information system risk assessment and POA&M process,

the information system level risk assessments for the GSS, Electronic-Systems for Program

Agreements and National Service Participants (eSPAN), and Momentum did not address, as

required by NIST, the risk management elements of likelihood and impact analysis. (Repeat)

• CNCS did not assess information security risks posed to CNCS through the use of the external

systems managed by service providers. (Repeat)

• CNCS did not ensure certain employees had the proper background investigations in

accordance with the risk associated with their assigned positions. (Modified Repeat)

Many of these weaknesses can be attributed to an inconsistent enforcement of the agency-wide

information security program across the enterprise. These deficiencies can increase the risk of

unauthorized access to CNCS’s systems used to capture, process, and report financial

transactions and balances. Effective system security begins with strong governance, including

agency level oversight and controls monitoring of CNCS field offices.

Although CNCS had policies for the operation of its information security program, its

implementation of those policies across the enterprise and managing information security risk

need strengthening to preserve the confidentiality, integrity and availability of CNCS’s

information and information systems. CNCS should increase its efforts to mature its risk

management program, monitor compliance with CNCS information security policies and 

procedures, and follow up with field offices to ensure remediation of identified control

weaknesses.

By not effectively implementing and enforcing IT policies and procedures and working towards

automation, continuous monitoring and consistent application of controls, there is an increased

risk that financial and personally identifiable information may be inadvertently or deliberately

misused and may result in improper disclosure or theft without detection. Without remediating

all significant security vulnerabilities, systems could be compromised resulting in potential harm

to confidentiality, integrity and availability of CNCS financial and sensitive data.

27

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FY 2018 Annual Management Report 

EXHIBIT B

Significant Deficiency

The information system security officer has detailed knowledge and expertise required to

manage the security aspects of an information system and, in many organizations, is assigned

responsibility for the day-to-day security operations of a system. Strengthening the

implementation of CNCS information security policies and procedures requires the information

system security officer, working in close collaboration with the information system owner to

ensure that the appropriate operational security posture is maintained for CNCS information

systems. In addition, the Chief Information Security Officer must ensure all facilities are

monitored to validate controls operated as intended, and control weaknesses are remediated.

Since CNCS has not implemented consistent automated processes to address continued control

weaknesses in its information security program, we made the same prior year’s

recommendations to assist CNCS in holding individual stakeholders accountable for remediation 

of control weaknesses, and ensuring information technology security controls operate as

intended agency-wide. 

We recommend that CNCS:

60. Develop a multi-year strategy to better strategically prioritize and allocate resources to

address the new and continuing weaknesses identified and work towards automation,

continuous monitoring and consistent application of controls.

61. Enforce the agency-wide information security program across the enterprise and improve

performance monitoring to ensure controls are operating as intended at all facilities.

62. Strengthen and refine the process for communicating CNCS facility specific control

deficiencies to CNCS facility personnel, and coordinate remediation of the control

deficiencies.

63. Strengthen and refine the processfor holding system owners and information system security

officers accountable forremediation of control deficiencies and ensuring that the appropriate

security posture is maintained for CNCS information systems.

64. Strengthen and refine the process for holding contractors accountable for remediation of

control deficiencies in CNCS information systems.

65. Implement all detailed recommendations in the FY 2018 FISMA Evaluation report.

2. Accounts Receivable (AR) and Allowance for Doubtful Accounts (Allowance) (new

significant deficiency)

CNCS’s AR balance at June 30, 2018 was misstated due to its failure to implement its policies and 

procedures and the ineffectiveness of its internal controls. Errors we reported in FY 2017

continued to exist in FY 2018. We found the following:

28

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FY 2018 Annual Management Report 

EXHIBIT B

Significant Deficiency

• CNCS did not follow its new CNCS Debt Management Policy by writing off AR items

delinquent for two years or more. We identified approximately $2.2 million in AR

balances as of June 30, 2018 that were not written-off or should have been

included in the allowance calculation.

• We identified $1.6 million in stale AR balances dated as far back as FY 2004 that

CNCS could not support.

• CNCS did not update its allowance methodology to reflect the new requirements

in its Debt Management Policy.

• CNCS also did not update its assumptions used in the allowance calculation based

on its current AR collection patterns.

We recommend that CNCS:

66. Strengthen internal controls over the entire AR process cycle to ensure that AR transactions

are properly supported, documented, and readily available for examination.

67. Reconcile the AR subsidiary ledger to the general ledger monthly.

68. Reevaluate the policies and procedures for calculating the allowance for doubtful accounts.

Related policies and procedures should include: (a) CFO Office’s staff’s periodic review of the

accounts receivable aging report, (b) assessment of the collectability of outstanding balances

based on the age of the debt, collections attempted and received thus far and other

information about the debtor and (c) determination for possible write-offs.

69. Revise the Allowance for Doubtful Accounts methodology to be consistent with the Debt

Management Policy.

70. Track and revise collection efforts based on data analysis. A reasonable timeframe for writeoffs should be established for accounts receivable without any activity. Once an outstanding

receivable is deemed uncollectible, itshould be written off in accordance with management’s

established policy.

29

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Page | 

30

 | 45

FY 2018 Annual Management Report 

EXHIBIT C

Management’s Response

Thank you for the opportunity to respond to the results of your audit of the Corporation 

for National and Community Service’s (CNCS) financial statements, and the financial 

statements of the National Service Trust. This is a response to both of those reports.

CNCS does not entirely concur with all of the conditions and recommendations in the 

reports.

The Office of the Chief Financial Officer (OCFO) experienced unprecedented turnover in 

Fiscal Year (FY) 2018. At one point an office within OCFO had 60% of management 

positions vacant. Those vacancies made it difficult to provide information sufficiently 

responsive to the auditor’s inquiries leading them to conclude data did not exist or 

controls were not in place. CNCS addressed that condition by bringing in new leadership. 

Those leader fully understand the Human Capital and policy and procedures challenges in 

ensuring that CNCS fully demonstrates it is appropriately accounting for its assets and 

funds, as well as, identifying and correcting weaknesses and deficiencies on an ongoing 

basis. 

In FY 2018 CNCS made significant progress in redefining its approach to accounting for 

the National Service Trust (Trust). Close coordination with the Department of Treasury 

and the Office of Management and Budget identified areas where the Trust’s operations 

were unique. The process also identified a significant accounting policy question that 

remains under consideration at the Federal Accounting Standards Advisory Board. 

External resources were engaged to review Trust liability and grant accrual processes. 

CNCS has been redesigning our systems of summarizing and reporting Trust 

transactions, and anticipate fully completing those changes before June 30, 2019. 

CNCS continues to demonstrate its commitment to improving its financial management 

operations and reporting. As part of CNCS’s Transformation and Sustainability Plan the 

agency is exploring shared service for Accounting and Procurement functions. CNCS 

will work with CLA during the audit remediation process 

Robert McCarty 

Chief Financial Officer 

November 13, 2018 
Page | 46

FY 2018 Annual Management Report 

EXHIBIT D

Status of Prior Year Findings

Our assessment of the current status of prior year audit findings is presented below.

Type of Finding FY 2017 Finding FY 2018 Status

Material Weakness Financial Reporting Modified Repeat: 

Material Weakness

Material Weakness Trust Fund Unpaid Obligations Modified Repeat: 

Material Weakness

Material Weakness Trust Service Award Liability Modified Repeat: 

Material Weakness

Material Weakness Grants Accrual Payable and Advances Modified Repeat: 

Material Weakness

Significant Deficiency Information Technology Security Controls Modified Repeat: 

Significant Deficiency

31
FY 2018 Annual Management Report 

Independent Auditors’ Report on National Service Trust Funds 

Financial Statements 

CORPORATION FOR NATIONAL 

& COMMUNITY SERVICE

OFFICE OF INSPECTOR GENERAL

AUDIT OF THE CORPORATION FOR

NATIONAL AND COMMUNITY SERVICE'S

 FISCAL YEAR 2018 

NATIONAL SERVICE TRUST FUND

FINANCIAL STATEMENTS

OIG Report 19-02

Prepared by:

CliftonLarsonAllen LLP

901 North Glebe Road, Suite 200

Arlington, VA 22203

This report was issued to Corporation management on November 15 , 2018. Under the laws and

regulations governing audit follow up, the Corporation is to make final management

decisions on the report’s findings and recommendations no later than May 15, 2019 , and

complete its corrective actions by November 15 , 2019 . Consequently, the reported findings do

not necessarily represent the final resolution of the issues presented.

Page | 47 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY 2018 Annual Management Report 

November 15, 2018 

TO: Barbara Stewart

Chief Executive Officer

FROM: Carol Bates /s/

Acting Assistant Inspector General for Audit

SUBJECT: Audit of the Corporation for National and Community Service’s

Fiscal Year 2018 National Service Trust Fund Financial Statements,

OIG Report 19-02

We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP

(CLA) to audit the Corporation for National and Community Service’s (CNCS’s) National Service

Trust Fund financialstatements(Trust financialstatements) as of September 30, 2018 and for the

year then ended. The contract required that the audit be performed in accordance with the

United States generally accepted government auditing standards and applicable Office of

Management and Budget audit guidance.

In its audit of the fiscal year 2018 Trust financial statements, CLA reported:

• Disclaimer of Opinion: CNCS was unable to provide adequate evidential matter to support a

significant number of transactions and account balances due to inadequate processes and 

controls to support transactions and estimates, and incomplete records to support

accounting fortransactionsin accordance with generally accepted accounting principles. CLA

has not been able to obtain sufficient appropriate audit evidence to provide a basis for an 

audit opinion.

• Four material weaknesses and one significant deficiency in Trust’s internal control over

financial reporting. These issues included:

o Material Weaknesses:

§ Internal Controls Program;

§ Financial System and Reporting;

§ Trust Fund Unpaid Obligations; and 

§ Trust Service Award Liability

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FY 2018 Annual Management Report 

250 E Street, SW « Suite 4100 « Washington, DC 20525 

202-606-9390 « Hotline: 800-452-8210 « www.cncsoig.gov 

o Significant Deficiency:

§ Information Technology Security Controls

• CLA was unable to perform all applicable tests of Trust’s compliance with certain provisions

of laws, regulations, contracts, and grant agreements, noncompliance with which could have

a direct and material effect on the determination of financial statement amounts and

disclosures.

Had CLA been able to obtain sufficient appropriate audit evidence to express an opinion on the

Trust financial statements, other material weaknesses or significant deficiencies, or instances of

noncompliance or other matters may have been identified and reported.

In connection with the contract, we reviewed CLA’s report and related documentation and

inquired of its representatives. Our review, as differentiated from an audit of the financial

statements in accordance with United States generally accepted government auditing standards,

was notintended to enable usto express, and we do not express, an opinion on the Trust financial

statements.

CLA is responsible for the attached independent auditors’ report, dated November 5, 2018, and

the conclusions expressed therein. However, our review disclosed no instances where CLA did

not comply, in all material respects, with United States generally accepted government auditing

standards.

Attachment

cc: Desiree Tucker-Sorini, Chief of Staff 

Timothy Noelker, General Counsel

Robert McCarty, Chief Financial Officer

Edward (Woody) Davis Jr., Acting Chief Information Officer

Lori Giblin, Chief Risk Officer

Lora Pollari-Welbes, Audits and Investigations Program Manager Mia 

Leswing, Principal-in-Charge, CliftonLarsonAllen LLP

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Inspector General of the

Corporation for National and Community Service

Report on the Financial Statements

We were engaged to audit the accompanying financial statements of the Corporation for

National and Community Service (CNCS), National Service Trust Fund (Trust), which comprise the

balance sheets as of September 30, 2018 and 2017, the statements of net cost and changes in 

net position, the combined statements of budgetary resources, forthe yearsthen ended, and the

related notes to the financial statements (referred to herein as financial statements).

Management’s Responsibility for the Financial Statements

CNCS management is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting principles generally accepted in the United States of

America (U.S.); this includes the design, implementation, and maintenance of internal control

relevant to the preparation and fair presentation of financial statements that are free from

material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility isto express an opinion on these financialstatements based on conducting the

audit in accordance with auditing standards generally accepted in the U.S.; the standards

applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin

No. 19-01, Audit Requirements for Federal Financial Statements (OMB Bulletin 19-01). Because

of the matters described in the Basis for Disclaimer of Opinion paragraph; however, we were not

able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

CNCS was unable to provide adequate evidential matter to support a significant number of

transactions and account balances, as presented in the accompanying financial statements as of

and for the years ended September 30, 2018 and 2017, due to inadequate processes and controls

to support transactions and estimates, and incomplete records to support accounting for

transactions in accordance with generally accepted accounting principles. The financial

statementline itemsimpacted by the lack of evidential matterinclude but are not limited to Trust

1

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT (Continued)

Service Award Liability and Trust Fund Unpaid Obligations. In addition, we were not able to audit

beginning balances.

Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion

paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a

basisfor an audit opinion. Accordingly, we do not express an opinion on the financialstatements

referred to in the first paragraph.

Report on Internal Control over Financial Reporting and on Compliance Based on an Audit of

Financial Statements Performed in Accordance with Government Auditing Standards

Internal Control over Financial Reporting

In connection with our engagement to audit the financial statements, we considered CNCS’s

internal control over financial reporting (internal control) to determine the audit proceduresthat

are appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of CNCS’s

internal control. Accordingly, we do not express an opinion on the effectiveness of CNCS’s

internal control. We did not test all internal controls relevant to operating objectives as broadly

defined by the Federal Managers’ Financial Integrity Act of 1982 (FMFIA).

Our consideration of internal control was for the limited purpose described in the preceding

paragraph and was not designed to identify all deficiencies in internal control that might be

material weaknesses or significant deficiencies; therefore, material weaknesses or significant

deficiencies may exist that have not been identified. However, as described in Exhibits A and B,

we identified certain deficiencies in internal control that we consider to be material weaknesses

and significant deficiency.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a 

deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable

possibility that a material misstatement of the financial statements will not be prevented, or

detected and corrected on a timely basis. We consider the deficiencies in the areas below, and

described in Exhibit A to be material weaknesses. 

1. Internal Controls Program (FMFIA)

2. Financial System and Reporting

3. Trust Fund Unpaid Obligations

4. Trust Service Award Liability

2

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT (Continued)

A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is

less severe than a material weakness, yet important enough to merit attention by those charged

with governance. We consider the deficiency in the area below, and described in Exhibit B to be

significant deficiency.

5. Information Technology Security Controls

Had we been able to obtain sufficient appropriate audit evidence to express an opinion on the

financial statements, other material weaknesses or significant deficiencies may have been

identified and reported herein.

Compliance with Laws, Regulations, Contracts, and Grant Agreements and Other Matters

In connection with our engagement to audit the financial statements, we were not able to

perform all applicable tests of CNCS’s compliance with certain provisions of laws, regulations,

contracts, and grant agreements, noncompliance with which could have a direct and material

effect on the determination of financial statement amounts and disclosures. Had we been able

to obtain sufficient appropriate audit evidence to express an opinion on the financialstatements,

instances of noncompliance or other matters may have been identified and reported herein.

Also, providing an opinion on compliance with those provisions was not an objective of our

engagement, and accordingly, we do not express such an opinion.

Management’s Responsibility for Internal Control and Compliance

CNCS management is responsible for (1) evaluating the effectiveness of internal control over

financialreporting based on criteria established underthe FMFIA and Government Accountability

Office’s Standards for Internal Control in the Federal Government, (2) providing a statement of 

assurance on the overall effectiveness on internal control over financial reporting, and (3) 

complying with other applicable laws, regulations, contracts, and grant agreements.

Auditors’ Responsibilities

We are responsible for (1) obtaining a sufficient understanding of internal control over financial

reporting to plan the audit, and (2) testing compliance with certain provisions of laws,

regulations, contracts, and grant agreements.

We limited our tests to certain provisions of laws, regulations, contracts, and grants agreements

noncompliance with which could have a direct effect on the determination of material financial

statement amounts and disclosures. We were not able to perform all applicable tests of CNCS’s

compliance due to inability to obtain sufficient appropriate audit evidence to enable usto express

an opinion on the financial statements. Also, providing an opinion on compliance with those

provisions was not an objective of our engagement, and accordingly, we do not express such an 

opinion.

3

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FY 2018 Annual Management Report 

INDEPENDENT AUDITORS’ REPORT (Continued)

CNCS’s Response to Findings

CNCS’s response to the audit findings in our report is included in Exhibit C. In its response, CNCS

stated that “CNCS does not entirely concur with all of the conditions and recommendations in 

the reports.” CNCS, however, did not provide CLA with any responses to its conditions and

recommendations. Accordingly, CLA was not aware of which conditions and recommendations

were non-concurred with. CLA stands by the results of its audit. We did not audit CNCS’s

response and, accordingly, we express no opinion on the response.

Status of Prior Year Findings

The status of findings in prior year Independent Auditors’ Report, dated November 8, 2017, is 

included in Exhibit D.

Purpose of the Report on Internal Control over Financial Reporting and on Compliance

The purpose of the Report on Internal Control over Financial Reporting and on Compliance is

solely to describe the scope of our testing of internal control and compliance and the result of

that testing, and not to provide an opinion on the effectiveness of CNCS’s internal control or on

compliance. These reports are an integral part of an audit performed in accordance with

Government Auditing Standards in considering CNCS’s internal control and compliance.

Accordingly, these reports are not suitable for any other purpose.

CLIFTONLARSONALLEN LLP

Arlington, Virginia

November 5, 2018

4

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FY 2018 Annual Management Report

 Page | i

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER

FY 2018 Annual Management Report

 Page | 19

EXHIBIT A 

Material Weakness

5 

1. Internal Controls Program (FMFIA) (new material weakness)

An effective system of internal control is necessary to provide reasonable assurance that a 

Federal entity conducts its programmatic activities effectively and efficiently, has a reliable 

financial reporting system and complies with applicable laws and regulations. OMB Circular No. 

A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, Policy

section. Without a fully functional internal controls program, CNCS might not meet its financial, 

programmatic and compliance objectives. Establishing internal controls that meet Federal 

standards is a core responsibility of the management of a Federal agency, as required by the 

Federal Managers Financial Integrity Act of 1982, OMB Circular No. A-123 and the Government 

Accountability Office’s (GAO’s) Standards for Internal Control in the Federal Government. 

In Fiscal Year (FY) 2018, CNCS’s system of internal control did not meet Federal requirements or 

operate effectively. The system of internal controls failed to identify numerous and pervasive 

material weaknesses that we found in financial reporting and in specific material line items on 

the financial statements. CNCS also did not complete corrective actions for the four material 

weaknesses identified in last year’s financial statement audits, and those material weaknesses 

persisted during FY 2018. 

Individual deficiencies include: 

• CNCS’s entity-level control assessment noted that entity-level controls supporting 

five of the 17 internal control principles were not operating effectively.

1

• CNCS failed to identify five new material weaknesses discovered by auditors in the 

FY 2018 financial statement audit.

 

• CNCS had incomplete or inaccurate business process narratives for critical 

financial statement processes and items, such as:

o Trust Service Award Liability; 

o Accounts Payable (AP) and Expenditures; 

o Financial Reporting (Expense-Cost Allocation); and

o Accounts Receivable (AR)

 

1 The five principles are: 

• Principle 10: Management should design control activities to achieve objectives and respond to risk; 

• Principle 11: Management should design the entity’s information system and related control activities to 

achieve objectives and respond to risks; 

• Principle 12: Management should implement control activities through policies; 

• Principle 13: Management should use quality information to achieve the entity’s objectives; and 

• Principle 15: Management should externally communicate the necessary quality information to achieve 

entity’s objectives. 

See GAO’s Standards for Internal Control in the Federal Government.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

• CNCS did not test the design and operating effectiveness of the internal controls

related to the TSAL which is a significant accounts.

• CNCS did not implement corrective action plansforthe three material weaknesses

we reported in the prior year financial statement audit.

• CNCS did not assess information security risks to its external systems managed by

service providers.

• CNCS did not timely provide to the external auditors a risk register that records

identified risks at the mission and business process level, or Tier 2 as defined by

the National Institute of Standards and Technology.

Despite these persistent and pervasive material weaknesses, CNCS’s Chief Executive Officer

(CEO) asserted in her FY 2018 assurance statement that, based on CNCS’s assessment of risk and

internal control, CNCS could provide reasonable assurance that CNCS’s internal control over 

operations, reporting and compliance was operating effectively as of September 30, 2018, except

for the material weaknesses identified in our audit. CNCS did not provide us with evidence to

support this modified assurance statement, and it is not justified by the results of CNCS’s own

testing. OMB Circular No. A-123 clearly states that agency management should provide

statement of no assurance when there are either “no processes in place or pervasive material

weaknesses.”2 (emphasis added)

Given (1) the acknowledged material weakness in internal control over financial reporting; (2)

the individual material weaknesses on TSAL and Trust Fund Unpaid Obligation; (3) CNCS’s own

failure to identify the material weaknesses that we found; (4) CNCS’s acknowledged failure to

complete testing of controls over critical processes; and (5) the failure to resolve corrective

actions for the material weaknesses found in last year’s audit, it is difficult to see how CNCS could

offer any assurance about the adequacy of its internal controls over financial reporting. The

CEO’s assurance statement omitted the required statement as to whether CNCS’s financial

management systems were in compliance with applicable Federal requirements.

Furthermore, the CEO’s assurance statement did not accurately describe the extent and

seriousness of the financial reporting issues identified by the external auditors. The material

weakness in financial reporting was not merely that “[t]he financial statements were not

prepared and presented in accordance with Federal standards.” Rather, we identified pervasive 

and systemic internal control failuresthat impact the integrity, accuracy and the overall reliability

of the financial statements. Refer to the financial system and reporting material weakness

number 2 below for details.

2 OMB Circular No. A-123, Section VI. E.

6

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

While we did not audit the internal control over programmatic operations, we also take note that 

CNCS has not completed or implemented corrective actions to address the serious grant

monitoring weaknesses reported by GAO3 and by CNCS-OIG.4 These open recommendations

relate to the accuracy of CNCS’s grant risk assessment and the design and effectiveness of its

grant management and monitoring. The absence of sound monitoring of CNCS’s core business,

which accounts for 75 percent of its operating budget, represents a potentially serious gap in the

internal control over operations.5 It is not clear whether or how CNCS considered information

from the GAO report or from the OIG’s work in determining whether the internal controls over

programmatic operations were adequate. 

These longstanding, pervasive material weakness issues present significant risks at CNCS. An 

effective internal controls program should include coordination and collaboration agency-wide

acrossfunctional offices and leadership to (1) properly assign responsibility and monitor progress

and (2) timely communicate quality information so that agency management can make informed

decision about risks and resources.

There was lack of communication and coordination between the Office of the Chief Risk Officer

(OCRO) and Accounting and Financial Management Services (AFMS) on identifying risks that 

could impact the financial reporting process and assessing risks related to the use of service

organizations. Although the OCRO conducted its entity-level assessment in FY 2018, it has

decided to perform the assessment on a rotational basis in future years. Forgoing an annual

entity-level control assessment may leave CNCS unaware of new internal control weaknesses and 

delay its ability to identify and mitigate agency-wide risks. 

OMB Circular No. A-123 requires management to continuously monitor, assess, and improve the

effectiveness of internal control associated with those internal control objectives identified as

part of their risk profile to support the annual assessment and report on internal control as

required by the FMFIA.6

 It also requires management to regularly review risk to ascertain

whether the risk profile has changed and gain assurance that risk management is effective or

whether further action is necessary. Management must have processes in place to assess

whether risks continue to exist, new risks have emerged and the impact of those risksin providing

assurance on the effectiveness of controls.7

 

In summary, CNCS does not have a reliable, mature internal control program sufficient to comply

with government-wide standards.

3 GAO Report GAO-17-90, Grants Management: Monitoring Efforts by Corporation for National and Community

Service Could Be Improved, March 21, 2017 4 CNCS-OIG Semiannual Report To Congress 18-01, Appendix A Unimplemented Recommendations. 5 CNCS’s internal controls assessment of grant monitoring currently focuses on confirming grant compliance (e.g.,

timeliness and completeness of documentation) rather than assessing effectiveness of grant management. 6 OMB Circular No. A-123, Section IV. 7 OMB Circular No. A-123, Section II. 

7

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

We recommend that CNCS:

1. Establish responsibility and accountability to ensure that CNCS complies with OMB Circular

No. A-123 and holds appropriate CNCS management officials accountable in supporting the

internal control assessment process.

2. Engage in periodic meetings with the functional offices to identify risks associated with

significant financial statement line items and gather the necessary information to make

informed decisions as part of the risk assessment process. Specifically, OCRO should:

a. Stay informed regarding new and open audit recommendationsto ensure that key

operational and financial control deficiencies are identified, and those controls are

documented in CNCS’s business process narratives and risk control matrices.

b. Actively participate in ongoing financial statement audit status meetings and stay

informed on identified risks to ensure that functional offices are held accountable

and addresses those specific risks through the assurance statement preparation

process.

c. Develop a process and criteria for functional offices to follow when they review

and assessservice organization reports and incorporate the results in their annual

assurance statements. The process should include assigning responsibility for

each service organization report to applicable functional offices, a timeline for

completion, and meetingsto discusstheir assessment results priorto finalizing the

assurance statements. The assessment should also include consideration of any

complimentary user controls and documentation of the existence and operating

effectiveness of such user controls. Guidance should be provided to functional

offices on how to respond to service organization reports with modified opinion

and exceptions related to control objectives.

3. Continue the process to develop and update all business process narratives with realistic

timeline and monitor status to meet completion milestones. All documented business

processshould be accurate and reflect the actual business practices. Key controlsshould also

be properly identified in the narratives.

4. Develop guidance and best practices for functional offices for completing assurance

statements. Guidance should clearly identify what would constitute an adequate internal

control assessment from which the functional offices can rely on to submit an unmodified

assurance statement. Guidance should also be provided to functional offices with clear

definitions and examples on control deficiency,significant deficiency, material weakness; and

when a modified or no assurance statement should be provided.

5. Require functional offices to provide supporting documents for their assurance statements.

OCRO should establish quality control reviews of the support for function offices’ assurance

statements to ensure that they are complete, and the functional offices address business

8

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FY 2018 Annual Management Report 

EXHIBIT A

Material Weakness

cycles, financial statement line items and systems under their purview of responsibility to 

ensure consistency with the assurance statements.

6. Update definitions from the assurance statement guidance as to what constitutes a modified

and no assurance statement.

2. Financial System and Reporting (modified repeat material weakness)

CNCS’s financial reporting was hindered by limitations in its financial system (Momentum) and

the timing and difficulties arising from an upgrade, accounting staff turnover, and inadequate

internal controls. The combination of these weaknesses prevented CNCS from providing

auditable financial statements. These limitations contributed to an environment that forced

CNCS to adopt temporary fixes rather than complete solutions to address pervasive longstanding

issues.

Effective controls in financial reporting are critical to ensure that CNCS’s financial information is

adequate, accurate and reliable, so that Congress and the general public can hold CNCS

accountable for the expenditure of taxpayers’ money. CNCS’s financial reporting internal

controls were either not properly designed or not implemented effectively. Repeated financial

reporting issues from the prior year continued in FY 2018, which resulted in unreliable financial 

information, including the failure to prepare complete and accurate interim financialstatements.

Moreover, CNCS’s internal control program failed to ensure that adequate corrective actions

were developed and timely executed. CNCS lacked the staff to accomplish these goals.

Consequently, we see little or no progressin addressing most of the financialreporting conditions

from the prior year. Resolutions of financial reporting internal control issues were further

complicated by turnover of key accounting personnel. For example, the Director of AFMS position

was vacant for the majority of the fiscal year, with multiple key accounting staff resigning from

CNCS during FY 2018. Overall, CNCS’s control environment did not demonstrate the required

discipline to present reliable and auditable financial statements. As a result, CNCS’s financial

statements were deemed unauditable again in FY 2018.

Our audit proceduresfound the continuation of problematic conditionsfrom the prior year audit.

We categorize these issues as follows:

a. Financial statements not prepared in accordance with generally accepted accounting

principles (GAAP);

b. Lack of internal controls related to the preparation and review of CNCS’s financial

accounting and reporting process;

c. Systemic deficiencies in the core financial system; and

d. Improper design of internal controls for the use of Standard Vouchers (SVs).

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FY 2018 Annual Management Report 

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Material Weakness

OMB Circular No. A-123 requires agency management to establish and maintain internal

controls to achieve the objectives of effective and efficient operations, reliable financial

reporting, and compliance with applicable laws and regulations.

A. Financial statements not prepared in accordance with GAAP

CNCS’s June 30, 2018 (interim) financial statements were not completed and prepared in

accordance with GAAP. Certain line items, statements, and notes were either not prepared or

were not updated until the year-end. For example:

• CNCS did not properly report its program expenses on the Statement of Net Cost because

indirect costs allocation among each CNCS program was only performed at year-end.

• CNCS did not prepare the National Service Trust Fund financial statements and

accompanying notes at interim periods.

Preparing complete and accurate financial statements and notes at interim financial reporting

periods would allow CNCS to timely detect and correct errors and to assess the effectiveness of

the financial reporting process and controls. Limiting financial reporting procedures and key

controls to year-end increases the risk of material misstatements and omissions of required 

information from the financial statements and notes.

We recommend that CNCS:

7. Record transactions in accordance with GAAP.

8. Prepare a complete set of National Service Trust Fund interim financial statements and notes

in accordance with GAAP.

9. Implement effective internal controls to ensure interim financial statements and notes are

properly reviewed and approved by appropriate CNCS staff and account balances are

accurate as of and through the reporting periods.

B. Lack of internal controlsrelated to the preparation and review of CNCS’sfinancial accounting

reporting process

B1. Internal control deficiencies in the preparation of the financial statements and review of

the trial balance

CNCS’s monthly trial balance review was incomplete and ineffective. Staff did not properly

research, follow up and document explanations for known and recurring account balance

differences, including abnormal account balances. The analysis also did not include a complete

budgetary-to-proprietary analysis (tie point) to assess the reasonableness of related accounts

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FY 2018 Annual Management Report 

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and balances. The Treasury Financial Manual (TFM) United States Standard General Ledger

(USSGL) standard accounting entries require, in most transactions, the recording of both

budgetary and proprietary accounts for a transaction. Therefore, tie points show the

relationships of these related accounts that are reported in different basic financial statements.

This high-level analysis allows management to detect anomalies in balances.

Moreover, CNCS did not perform a complete, accurate and up-to-date fluctuation analysis of the

June 30, 2018 account balances. CNCS did not document the explanations forsignificant balance

fluctuations or the explanations offered were so generic that they did not address the specific

nature of the transactions, change in operations or trends sufficient to show the root causes of

the balance fluctuations. CNCS also did not document financial account balance fluctuation 

expectations based on its operating environment and compare those expectations to the

identified significant balance fluctuations for reasonableness or unexpected change. In some

cases, the balances used for the fluctuation analysis differed from the balances on the financial

statements.

Other financial reporting internal control deficiencies include an incomplete financial statement

review checklist; lack of reconciliation between the Combined Statement of Budgetary Resources

and the Report on Budget Execution and Budgetary Resources (SF-133); incomplete general

ledger and transaction details; and inadequate support to validate transaction details and 

balances for significant financial statement line items.

B2. The cost allocation process was not documented and properly supported.

CNCS does not have adequate policies and procedures for the allocation of indirect costs among

its programs. CNCS was unable to demonstrate how it processed indirect costs in Momentum

and how it derived and calculated costs allocation percentagesto each program and subprogram.

The key individual responsible for the cost allocation process was a Momentum developer

contractor who left CNCS in September 2018 right before the year-end financial reporting

process.

B3. CNCS did not review legacy transaction codes with balances for validity

CNCS did not perform the necessary research to determine whetherlongstanding balancesin the

“TJ” (used to report Trust Fund commitments and obligations) and “JV” (journal voucher)

document types represent valid undelivered orders. Document types “TJ” and “JV” were legacy

transaction codes that CNCS discontinued in FY 2007 and FY 2011, respectively. The June 30,

2018 unliquidated order report showed:

• A net balance of approximately $8.6 million associated with document type “TJ,” the

obligation for which was initially recorded in FY 2007; and

• A net balance of more than $6 million associated with document type “JV,” dating to FY

2004.

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FY 2018 Annual Management Report 

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We identified these balances from our initial review during last year’s audit. They remained

unchanged at June 30, 2018.

We recommend that CNCS:

10. Develop comprehensive policies and procedures for the financial statements preparation

process and related internal controls. The policies and procedures should address, among

other subjects:

a. The process to determine and document CNCS’s balance fluctuation expectations

should be based on a combination of internal and external operating factors, and

program and financial relevant information available.

b. The materiality threshold used to determine significant balance fluctuations that

require further research should be more conservative than that used by external

auditors and consistent with the materiality thresholds used by the OCRO (as part

of the OCRO’s OMB Circular No. A-123 assessment) to ensure integration and

consistency between AFMS and OCRO.

c. Detailed process to research significant balance fluctuations. CNCS should 

research and explain all significant balance fluctuations at the account and

transaction level. Maintain and have the supporting documentation readily

available. 

d. Review balance differences between proprietary and budgetary accounts.

e. Research and retain supporting documents required for any identified account

balance differences derived from its abnormal balance review or the tie point

analysis.

f. Address fatal and non-fatal Government wide Treasury Account Symbol Trial 

Balance (GTAS) edit failures.

g. Address all balance differences and retain supporting documentation of related 

research.

h. Complete the GAO Financial Audit Manual Checklist section 2010, Checklist for 

Federal Accounting, and section 2020, Checklist for Federal Reporting and

Disclosures.

11. Ensure its balance fluctuation analysis is complete, comprehensive, supported and 

substantive to allow management to detect accounting errors or evaluate reasonableness of 

balances.

12. Prepare a complete set of quarterly financial statements and notes for the National Service

Trust Fund.

13. Creates a monthly/quarterly accounting and financial reporting operational checklist with

assigned responsibility for each AFMS staff. The AFMS Director and the Chief Financial Officer

(CFO) should review the checklist to ensure all tasks are completed timely.

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14. Revise its current cost allocation memorandum titled “Corporation for National and

Community Service Financial Reporting Cost Allocation” to describe in detail the process for

allocating indirect costs allocation among CNCS programs, including indirect cost allocation

methodology, basis of allocation, assumptions, sources of data, allocation period timeline,

and review process.

15. Review and research the balances for discontinued document types, such as “TJ” and “JV” to 

determine their validity and correct them accordingly. Document and maintain support for

any accounting adjustments made to correct the balances.

16. Identify any additional unused document types and transaction types and related balances

for possible liquidation.

17. Work with the Momentum support team to remove any document types that are no longer

used. 

C. Systematic deficiencies in the core financial system

C.1 Non-compliance with OMB Circular No. A-11: CNCS did not use object class codes to record

certain transactions 

CNCS’s financial system was not properly set up to record transactions with object class (OC)

codes. Our analysis of the CNCS general ledger history report identified pervasive errors such as

transactions without OC codes or with inaccurate OC codes. The financial system set up was also

not in compliance with OMB Circular No. A-11, Preparing, Submitting, and Executing the Budget,

which requires OC codes be associated with the USSGL transactions. As a result, considerable

research is needed to correct the OC reporting of many transactions related to undelivered 

orders or delivered orders budgetary accounts. To compensate for the system limitation, CNCS

uses general ledger accounts and sub-accounts with associated document type and transaction 

type codes to classify transactions for reporting. However, this time-consuming, manual effort

could increase the risks of financial reporting errors. This deficiency had also negatively impacted

CNCS’s compliance with the statutory requirement of the Digital Accountability and Transparency

Act (DATA Act) reporting during FY 2017.

8

C.2 CNCS failed to timely submit required external reports due to financial system upgrade

issues

CNCS executed an upgrade to its financial system on June 25, 2018, immediately before the

quarter-end financial reporting close-out period. CNCS accepted at face value the financial

8 OIG Report 18-05: Performance Audit of the Corporation for National and Community Service’s Compliance under

the Digital Accountability and Transparency Act of 2014

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system contractor’s assurances that the upgrade would have no operational impact and did not

independently assess or anticipate the risks and impact of the system upgrade on CNCS’s

operations and financial reporting. CNCS also did not prepare contingency measures to mitigate

any negative impact from the financial system upgrade to its financial reporting. This upgrade

caused various accounting system issues, including the delays in certifying three Treasury

Account Symbols (TAS) in U.S. Treasury’s GTAS file submission.

We recommend that CNCS:

18. Develop a plan to upgrade itsfinancialsystem to includeOC codes which should be associated

with USSGL in accordance with OMB Circular No. A-11.

19. Provide mandatory training to CNCS accounting staff on the proper use of OC, sub general

ledger accounts, and document/transaction types on all obligation and expense transactions.

20. Continue to evaluate and correct, if necessary, any ongoing negative impact of the financial

system upgrade on financial reporting.

21. Identify and collect feedback from all stakeholders to ensure all concerns and risks on the

system upgrade are addressed and risks are mitigated.

22. Developmilestonesfor the complete implementation of the resolutionsrelated to the system

upgrade issues.

D. Improper design of internal controls for the use of SVs

CNCS overuses SVs to work around limitations to its accounting system and ineffective financial

reporting internal controls. CNCS uses SVs to address significant recurring financial reporting

issues across multiple funds, instead of resolving the underlying causes of the problems that the

SVs are intended to circumvent. In many cases, incorrect SVs were used to correct other SVs

which led to misstatements in the financial statements. Moreover, substantial SV transactions’

definition or posting logic are outdated, inaccurate or inconsistent with the latest USSGL

guidance. As of June 30, 2018, CNCS recorded approximately $4.4 billion in absolute value

through SVs. We also identified control deficiencies of the use of SVs, such as untimely approval;

lack of supporting documentation; generic SV descriptions without specific justification of its

usage; and lack of policies and procedures over the use of SVs. This over-reliance, incorrect usage 

and inaccurate SVs create a high risk of material misstatements in the financial statements.

We recommend that CNCS:

23. Work with the financial system developer to identify and remediate the causes that give rise

to the current excessive reliance on SVs.

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24. As part of the process to correct long-standing financial system configuration issues, examine

the document types in the transaction definitions against the USSGL and correct the

transaction posting logic.

25. Track the outstanding balances with system configuration issues until their full liquidation.

26. Document and retain the results of actions taken for recommendations above, including the

final decisions and solutions to resolve the system issue.

27. Develop and implement policies and procedures for the SV process that include:

a. tracking the sequence of SVs for completeness;

b. appropriate use of SVs;

c. determining and maintaining relevant documentation to support each SV;

d. use of specific and accurate SV descriptions;

e. timely review and approval of SVs; and

f. reviewing and approving all SVs for accuracy and propriety.

3. Trust Fund Unpaid Obligations (modified repeat material weakness)

CNCS continued to significantly overstate its Trust obligation balance and obligated substantially

more than is necessary to pay its outstanding liabilities. As of June 30, 2018, CNCS had not

adjusted downward the obligations related to expired AmeriCorps education awards and has not

done so since the Trust Fund’s inception in 1994. CNCS also did not separately track and record

transactionsfor upward adjustment to prior year unpaid obligations. In addition, CNCS obligated

all interest received on the Trust Fund’s investment upon receipt, without adequate justification.

The interest revenue should have been recorded as unobligated budgetary resources in 

accordance with OMB Circular No. A-11. As a result, CNCS has obligated far more than it actually

owes for unpaid education awards.

In our review of the relationship between Trust unpaid obligations and the service award liability

on the financial statement, we noted significant variances. CNCS could not provide adequate

transaction details and explanations to support and account for these differences between Trust

unpaid obligations and service award liability, as shown in the table below.

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6/30/2018

$ in

thousands

9/30/2017

$ in

thousands

6/30/2017

$ in

Financial Statement Line Item thousands

Unpaid Obligations, End of Period $672,871 $669,082 $616,853 (per Statement of Budgetary Resources)

Less: Service Award Liability (per Balance $351,912 $397,631 $391,499 Sheet)

Difference $320,959 $271,451 $225,354

The huge disparity of balances between the Trust unpaid obligations and service award liability

continued to grow. CNCS was unable to provide a detailed schedule of the undelivered orders as

of June 30, 2018,so we could validate the unpaid obligations balance. These unsupported unpaid

obligationsinclude amounts for AmeriCorps memberslotsthat were never filled, interest earned 

on Trust investments which was obligated without adequate justification, and expired awards

that no longer represent obligations. Those amounts should be de-obligated from the Trust. We 

identified each of these issues in the prior year audit, but they remained unresolved at June 30,

2018.

CNCS began to implement a new methodology to estimate Trust liability and obligation balances

in FY 2018. The new process was not completed and implementation did not begin until after

the end of the fiscal year. CNCS advised us orally that it intended to use the new methodology

to adjust the Trust obligation balance as of September 30, 2018 to account for the above issues

identified in last year’s audit. However, the methodology wasin itsinfantstage and had not been

finalized and vetted. The analysis and recordation of an adjustment was described by CNCS as

the first phase of a five-phase implementation process described in a draft “Corrective Action

Plan” (provided to usin August 2018) to address the prior year material weaknessesin Trust Fund

Unpaid Obligations and Trust Service Award Liability. We noted, however, that the new

methodology did not include development or implementation of any internal controls related to

the new Trust obligation process. CNCS continued to make changes to the proposed new

methodology throughout the audit period, leaving us unable to perform adequate audit

procedures to assess the completeness, accuracy,reasonableness, and integrity of eitherthe new

methodology itself or the resulting adjustments to the Trust obligation balance as of the yearend. 

We recommend that CNCS:

28. Discontinue obligating interest revenue automatically upon receipt and deobligate amounts

representing interest previously obligated, or document the authority to automatically

obligate interest earned.

29. Document and implement policies and procedures to include the following:

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Material Weakness

a. review obligations to verify that amounts, timeframe (i.e., grant dates are

correctly reflected in the obligation) and age are accurately reflected in the status

of the obligation to confirm their validity;

b. ensure obligations are sufficiently supported (i.e., by documentary evidence);

c. reconcile obligations to source documents (such as grant agreements); and

d. perform complete reconciliations of all outstanding obligations monthly, and

ensure any discrepancies identified are promptly researched and resolved.

30. Implement a complete and correct mapping of the accounting transactions (such as

downward adjustments to the obligations) incurred for the Trust Fund to the proper USSGL

accounts and financialstatementline items, for both the budgetary and proprietary accounts.

31. Finalize the new methodology on Trust obligations.

32. Document a complete and comprehensive policies, procedures and process narratives

related to the National Service Trust’s accounting and financial reporting, including obligation

recording and reporting.

33. Ensure that the policies and procedures for the new methodology include properly designed

internal control activities, such as the preparation of the estimate, periodic testing and

periodic updates to the methodology.

4. Trust Service Award Liability (TSAL) (modified repeat material weakness)

TSAL model deficiencies and lack of quality controls resulting in input and calculation errors in

TSAL

The TSAL of $304 million (unaudited) is the largest liability on CNCS’s financial statements as of

September 30, 2018. CNCS developed a model to estimate the anticipated service awards to be 

paid by the Trust. The calculation of this liability is based on a variety of factors, such as member

enrollment levels, education award earning statistics, usage patterns and interest forbearance.

As mentioned above, CNCS’s new Trust service liability and obligation estimation methodology

was not in use until after September 30, 2018. Therefore, the serious deficiencies that we

identified in the TSAL model in FY 2017 audit continued through June 30, 2018 and thereafter.

Recurring issues included calculation errors and lack of quality controls that significantly

impacted the accuracy of the reported liability.

We identified the following deficiencies of the TSAL model: (a) CNCS failed to prevent, detect and

correct material calculation errors on the June 30, 2018 estimated Trustservice liability; (b) CNCS

estimates its outstanding liability for education awards by means of an Excel-based spreadsheet,

which is prone to human errors and had security deficiencies arising from inadequate physical 

access and version controls; (c) CNCS used a manual cut-and-paste process to transfer data from

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other system reports to the TSAL model, with ability to override assumptions without adequate

justification or documentation; (d) CNCS did not use discount ratesin its TSAL calculation; and (e)

inadequate documentation of the key assumptions, procedures and controls, sources and

validation of data. As with the Trust Fund obligation methodology, we were unable to perform

adequate audit procedures to review the TSAL balance and the new TSAL model.

We recommend that CNCS:

34. Review the prior yearrecommendations provided and ensure that any applicable considered

and incorporated in the new Trust Obligations and Liability model.

35. Develop a succession plan to ensure the required expertise is available in the event of

employee turnover. Such succession planning is key to helping CNCS continue achieving its

internal and external reporting objectives. CNCS needs to:

a. Train, mentor, and work to retain qualified employees;

b. Institute continued cross-training so that knowledge of the model will reside with

multiple staff rather than with one person; and

c. Implement a peer review process to carry out the necessary quality control

reviews of the TSAL model.

36. Strengthen controls to ensure the TSAL modelling is performed by trained personnel to:

a. Conduct detailed analysis and validation of data sources;

b. Review and ensure the reasonableness of assumptions used and document the

rationale behind these assumptions;

c. Consider changes in conditions or programs that require further research and

analysis. Update the assumptions when necessary;

d. Compare estimates with subsequent results to assess the reliability of the

assumptions and data used to develop estimates.

37. Conduct a detailed study to determine the historical awards granted to members by

duration and by program year, and use the results of that study to adjust the calculation of

the Education Awards Earning Percentage.

38. Revise and update policies, key modelling assumptions, SOPs, and business process

narratives relevant to the Trust Fund’s accounting and financial reporting of education

awards.

39. Assessthe need and document management’s position regarding the discounting factors for

the TSAL in accordance with applicable Federal Accounting Standards Advisory Board’s

standards.

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FY 2018 Annual Management Report 

EXHIBIT B

Significant Deficiency

1. Information Technology Security Controls (modified repeat significant deficiency)

CNCS relies on information technology (IT) systems to initiate, authorize, record, process,

summarize and report financial transactions in the preparation of its financial statements.

Internal controls over these operations are essential to ensure the integrity, confidentiality and 

reliability of critical data while reducing the risk of errors, fraud and other illegal acts.

To balance high levels of service and reduce costs, CNCS’s Office of Information Technology has

outsourced the operation, maintenance and support of most of its IT systems. Outsourcing

introduces special considerations and risks regarding the protection of information and

information systems. Despite the outsourcing of IT systems, CNCS by law retains responsibility

for complying with the requirements of the Federal Information Security Modernization Act

(FISMA) and security control implementation.

Ourreview of IT controls covered general and selected business process application controls both

at the enterprise and at the facility levels, the Field Financial Management Center (FFMC),

National Civilian Community Corps (NCCC) campuses and State Offices. Our current year audit

identified security weaknesses that were corrected for certain control activities. Examples of 

CNCS improvements in its IT control environment include: enforcing the CNCS’s account

management procedures for disabling inactive accounts, tracking known security control

weaknesses in the Plan of Action and Milestones (POA&Ms), and updating the Continuity of 

Operations Plan based on revisions to the Business Impact Analysis and Disaster Recovery Plan.

While CNCS has taken some steps to remediate previously identified information security

weaknesses, its efforts has focused on developing policies and procedures and system security

documentation. These are necessary and foundational, but they are of limited value unless they

are supported by consistent implementation and monitoring ofsecurity controls. In addition, we

identified new and continued control weaknesses in the information security program that need

to be addressed, most importantly pertaining to access controls, configuration management and

system change controls, logging and monitoring controls, organization-wide and information 

system risk management, security authorization documentation, personnel screening, and 

physical access controls. Specifically, we identified enterprise and facility-level findings for each

of the following domains:

Configuration Management

• Vulnerabilities related to patch management, configuration management, and unsupported

software exposed the CNCS headquarters and field office networks to critical and high 

severity vulnerabilities. The average number of vulnerabilities per host scanned increased 

from last year.

CNCS’s vulnerability management program needs to improve to effectively identify, monitor

and remediate known vulnerabilities to reduce the risk of security breaches. This includes

monitoring and recording actions taken by the General Support System (GSS) contractor to

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FY 2018 Annual Management Report 

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ensure vulnerability remediation for network devices and servers is addressed or the

exposure to vulnerabilities is minimized (Repeat)

• CNCS documented standard baseline configurations only for its Microsoft Windows servers,

but not for its databases, network devices and Web browsers. In addition, certain Microsoft

Windows production servers did not have any standard baseline configurationsimplemented

and CNCS was not monitoring for deviations from the baselines. (Modified Repeat)

• CNCS did not monitor the Momentum configuration settings to ensure they were in

compliance with policy. Specifically, the configuration settings for disabling Momentum user

accounts and session timeout were not in compliance with the CNCS configuration policy.

(New)

• Change management policies and procedures for testing network changes were not

consistently implemented. (Repeat)

Access Control

• Disabling accounts for separated users were not fully applied for an application managed by

Microsoft Active Directory (AD). Although network accounts were disabled, accounts were

not removed from the AD Organizational Unit.

9

 Access to the application is managed through

AD; therefore, if the AD accounts were re-enabled, access to the application would be

maintained. (Modified Repeat)

• CNCS did not implement Personal Identification Verification multifactor authentication for

local and network access for privileged users and for network access for non-privileged users.

(Repeat)

• CNCS did not capture the Momentum Oracle security logs into its event correlation tool used

for audit log review, analysis and reporting. The event and trend analysis to investigate

security events is required by National Institute of Standards and Technology (NIST) for

information systems categorized as moderate. (Repeat)

• Management at two field offices did not ensure adequate physical access controls. (Modified

Repeat)

• Access control issues reported last year related to mobile devices and protection of

personally identifiable information at CNCS field offices were not remediated.10 (Repeat)

9 An Organizational Unit is a subdivision in Active Directory to hold users, groups, and computers with designated

Group Policy settings and account permissions. 10 Although we did not revisit CNCS field offices where we originally found these issues in FY 2017, CNCS confirmed

that it had not completed the related corrective actions. We did not find similar issues from the field offices we

visited during FY 2018.

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Significant Deficiency

Security Management

• The new Authorizing Official (AO) for CNCS’s General Support System did not sign a new

authorization decision document when the AO assumed the new role. Based on review of

the current authorization decision document, authorization package and updated documents

related to continuous monitoring activities, the new AO did not explicitly accept the known

risk and formally transfer responsibility and accountability for the GSS as required by NIST.

(New)

• CNCS did not timely provide a risk register to record identified risks at the mission and

business process level, or Tier 2, as defined by the National Institute of Standards and

Technology (NIST). Additionally, although the risk register at the information system level,

Tier 3, has been incorporated in the information system risk assessment and POA&M process,

the information system level risk assessments for the GSS, Electronic-Systems for Program

Agreements and National Service Participants (eSPAN), and Momentum did not address, as

required by NIST, the risk management elements of likelihood and impact analysis. (Repeat)

• CNCS did not assess information security risks posed to CNCS through the use of the external

systems managed by service providers. (Repeat)

• CNCS did not ensure certain employees had the proper background investigations in

accordance with the risk associated with their assigned positions. (Modified Repeat)

Many of these weaknesses can be attributed to an inconsistent enforcement of the agency-wide

information security program across the enterprise. These deficiencies can increase the risk of

unauthorized access to CNCS’s systems used to capture, process, and report financial

transactions and balances. Effective system security begins with strong governance, including

agency level oversight and controls monitoring of CNCS field offices.

Although CNCS had policies for the operation of its information security program, its

implementation of those policies across the enterprise and managing information security risk

need strengthening to preserve the confidentiality, integrity and availability of CNCS’s

information and information systems. CNCS should increase its efforts to mature its risk

management program, monitor compliance with CNCS information security policies and

procedures, and follow up with field offices to ensure remediation of identified control

weaknesses.

By not effectively implementing and enforcing IT policies and procedures and working towards

automation, continuous monitoring and consistent application of controls, there is an increased

risk that financial and personally identifiable information may be inadvertently or deliberately

misused and may result in improper disclosure or theft without detection. Without remediating

all significant security vulnerabilities, systems could be compromised resulting in potential harm

to confidentiality, integrity and availability of CNCS financial and sensitive data.

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FY 2018 Annual Management Report 

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Significant Deficiency

The information system security officer has detailed knowledge and expertise required to

manage the security aspects of an information system and, in many organizations, is assigned

responsibility for the day-to-day security operations of a system. Strengthening the

implementation of CNCS information security policies and procedures requires the information

system security officer, working in close collaboration with the information system owner to

ensure that the appropriate operational security posture is maintained for CNCS information

systems. In addition, the Chief Information Security Officer must ensure all facilities are

monitored to validate controls operated as intended, and control weaknesses are remediated.

Since CNCS has not implemented consistent automated processes to address continued control

weaknesses in its information security program, we made the same prior year’s

recommendations to assist CNCS in holding individual stakeholders accountable for remediation 

of control weaknesses, and ensuring information technology security controls operate as

intended agency-wide. 

We recommend that CNCS:

40. Develop a multi-year strategy to better strategically prioritize and allocate resources to

address the new and continuing weaknesses identified and work towards automation,

continuous monitoring and consistent application of controls.

41. Enforce the agency-wide information security program across the enterprise and improve

performance monitoring to ensure controls are operating as intended at all facilities.

42. Strengthen and refine the process for communicating CNCS facility specific control

deficiencies to CNCS facility personnel, and coordinate remediation of the control

deficiencies.

43. Strengthen and refine the process for holding system owners and information system

security officers accountable for remediation of control deficiencies and ensuring that the

appropriate security posture is maintained for CNCS information systems.

44. Strengthen and refine the process for holding contractors accountable for remediation of

control deficiencies in CNCS information systems.

45. Implement all detailed recommendations in the FY 2018 FISMA Evaluation report.

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FY 2018 Annual Management Report 

EXHIBIT C

Management’s Response

Thank you for the opportunity to respond to the results of your audit of the Corporation 

for National and Community Service’s (CNCS) financial statements, and the financial 

statements of the National Service Trust. This is a response to both of those reports.

CNCS does not entirely concur with all of the conditions and recommendations in the 

reports.

The Office of the Chief Financial Officer (OCFO) experienced unprecedented turnover in 

Fiscal Year (FY) 2018. At one point an office within OCFO had 60% of management 

positions vacant. Those vacancies made it difficult to provide information sufficiently 

responsive to the auditor’s inquiries leading them to conclude data did not exist or 

controls were not in place. CNCS addressed that condition by bringing in new leadership. 

Those leader fully understand the Human Capital and policy and procedures challenges in 

ensuring that CNCS fully demonstrates it is appropriately accounting for its assets and 

funds, as well as, identifying and correcting weaknesses and deficiencies on an ongoing 

basis. 

In FY 2018 CNCS made significant progress in redefining its approach to accounting for 

the National Service Trust (Trust). Close coordination with the Department of Treasury 

and the Office of Management and Budget identified areas where the Trust’s operations 

were unique. The process also identified a significant accounting policy question that 

remains under consideration at the Federal Accounting Standards Advisory Board. 

External resources were engaged to review Trust liability and grant accrual processes. 

CNCS has been redesigning our systems of summarizing and reporting Trust 

transactions, and anticipate fully completing those changes before June 30, 2019. 

CNCS continues to demonstrate its commitment to improving its financial management 

operations and reporting. As part of CNCS’s Transformation and Sustainability Plan the 

agency is exploring shared service for Accounting and Procurement functions. CNCS 

will work with CLA during the audit remediation process 

Robert McCarty 

Chief Financial Officer 

November 13, 2018 
 

FY 2018 Annual Management Report

EXHIBIT D

Status of Prior Year Findings

Our assessment of the current status of prior year audit findings is presented below.

Type of Finding FY 2017 Finding FY 2018 Status

Material Weakness Financial Reporting Modified Repeat: 

Material Weakness

Material Weakness Trust Fund Unpaid Obligations Modified Repeat: 

Material Weakness

Material Weakness Trust Service Award Liability Modified Repeat: 

Material Weakness

Significant Deficiency Information Technology Security Controls

24

Page | 73 

Modified Repeat: 

Significant Deficiency
 Page | 74
 

FY 2018 Annual Management Report
 

Consolidated Financial Statements
 

Corporation for National and Community Service
 

BALANCE SHEETS
 

As of September 30, 2018 and 2017
 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

RESTATED 

2017 

Assets 

Federal: 

Fund Balance with Treasury (Note 2) $ 1,210,560 $ 1,047,393 

Investments and Related Receivables (Note 3) 792,816 866,834 

Accounts Receivable, Net (Note 4) 1,142 835 

Non-Federal: 

Cash and Other Monetary Assets 25 118 

Advances to Others 66,662 62,560 

Accounts Receivable, Net (Note 4) 7,460 8,741 

Property and Equipment, Net (Note 5) 28,440 24,356 

Total Assets $ 2,107,105 $ 2,010,837 

Liabilities 

Federal: 

Advances from Others (Note 9) 13,611 18,592 

Other Liabilities (Note 10) $ 1,944 $ 1,819 

Non-Federal: 

Accounts Payable 482 3,864 

Advances from Others (Note 9) 237 12 

Grants Payable 130,773 95,228 

Trust Service Award Liability (Note 6) 304,320 388,134 

Accrued Annual Leave 3,938 4,350 

Actuarial FECA Liability (Note 8) 7,168 7,328 

Other Liabilities (Note 10) 9,219 8,065 

Total Liabilities $ 471,692 $ 527,392 

Net Position 

Unexpended Appropriation $ 989,069 $ 973,892 

Cumulative Results of Operations 646,344 509,553 

Total Net Position (Note 11) 1,635,413 1,483,445 

Total Liabilities and Net Position $ 2,107,105 $ 2,010,837 

The accompanying notes are an integral part of these statements 
 Page | 75
 

FY 2018 Annual Management Report
 

Community for National and Community Services
 

STATEMENTS OF NET COST
 

For the Years Ended September 30, 2018 and 2017
 

(in thousands ) 

UNAUDITED 

2018 

UNAUDITED 

RESTATED 

2017 

Gross Program Cost: 

 AmeriCorps SN $ 360,866 $ 328,618 

 AmeriCorps VISTA 89,944 88,567 

 State Commission 16,477 15,789 

 National Senior Service Corps 182,849 173,187 

 

 AmeriCorps NCCC 

 Operating Cost 54,011 58,106 

 Less: Earned revenue (24,375) (29,075) 

 Net AmeriCorps NCCC 29,636 29,031 

 

 Other programs: 

 Operating Cost 244,739 321,906 

 Less: Earned revenue (27,971) (21,227) 

 Net Other program cost 216,768 300,679 

 

Net Cost $ of Operations (Note 13) 896,540 $ 935,871 

The accompanying notes are an integral part of these statements. 
 Page | 76
 

FY 2018 Annual Management Report
 

Corporation for National and Community Services
 

STATEMENTS OF CHANGES IN NET POSITION
 

For the Years Ended September 30, 2018 and 2017
 

(in thousands) 

UNAUDITED 

 2018 

UNAUDITED 

RESTATED 

2017 

Unexpended Appropriations: 

Unexpended Appropriations - Cumulative $ 973,892 $ 928,727 

Unexpended Appropriations - Prior Period Adjustments 

–years preceding 7 

Budgetary Financing Sources: 

Appropriations - Received 1,063,958 1,030,358 

Appropriations - Adjusted (20,061) -

Appropriations - Used (1,028,720) (985,200) 

Total Budgetary Financing Sources 15,177 45,158 

Total Unexpended Appropriations 989,069 973,892 

Cumulative Results from Operations 

Cumulative Results from Operations 509,553 434,658 

Prior Period Adjustment due to correction of errors (35) 

Prior Period Adjustment due to correction of errors -

years preceding prior year 5,221 

Beginning Balance as Adjusted 509,553 439,844 

Budgetary Financing Sources 

Appropriations Used 1,028,720 985,201 

Donations 17 219 

Transfers in/out - 9,142 

Other Financing Sources (non-exchange) 

Imputed Financing Source 5,426 11,034 

Other Offset to Non Entity Collections (832) (16) 

Total Financing Sources 1,033,331 1,005,581 

Net Cost of Operations 896,540 935,871 

Net Change 136,791 69,709 

Cumulative Results of Operations 646,344 509,553 

 

Net Position (Note 11) $ 1,635,413 $ 1,483,445 

The accompanying notes are an integral part of these statements. 
 Page | 77
 

FY 2018 Annual Management Report
 

Corporation for National and Community Service 

STATEMENTS OF BUDGETARY RESOURCES 

For the Years Ended September 30, 2018 and 2017 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

2017 

Budgetary Resources 

Unobligated Balance from Prior year Budget Authority, 

net (discretionary and mandatory) $ 323,903 $ 306,954 

Appropriations (discretionary and mandatary) 1,284,042 1,251,773 

Spending Authority from Offsetting Collections 

(discretionary and mandatary) 40,084 39,619 

Total Budgetary resources $ 1,648,030 $ 1,598,346 

Memorandum (non-add) entries 

Net Adjustment to Unobligated Balance brought forward, 

October 1 22,702 15,188 

Status of Budgetary Resources 

New Obligations and Upwards Adjustments (total) $ 1,161,553 $ 1,297,144 

Unobligated Balance, end of year 

Apportioned, unexpired accounts 376,488 214,427 

Unapportioned, unexpired 3,474 2,091 

Unexpired Unobligated Balance, end of year 379,962 216,518 

Expired Unobligated Balance, end of year 106,515 84,684 

Unobligated Balance, end of year (total) 486,477 301,202 

Total Budgetary Resources $ 1,648,030 $ 1,598,346 

Outlays, Net 

Outlays, Net (total) (discretionary and mandatary) (Note 

20) 1,178,410 1,183,850 

Distributed Offsetting Receipts (215,321) (218,202) 

Agency Outlays, Net (discretionary and mandatary) $ 963,089 $ 965,648 

 

The accompanying notes are an integral part of these statements. 
 Page | 78
 

National Service Trust Funds Financial Statements
 

FY 2018 Annual Management Report
 

Corporation for National and Community Service

National Service Trust
 

BALANCE SHEETS
 

As of September 30, 2018 and 2017
 

(in thousands) 

UNAUDITED 

 2018 

UNAUDITED 

2017 

Assets 

Federal: 

Fund Balance with Treasury (Note 2) $ $ 134,897 9,921 

Investments and Related Receivables (Note 3) 792,816 866,834 

Non-Federal: 

Accounts Receivable 141 153 

Total Assets $ $ 927,854 876,908 

Liabilities 

Non-Federal: 

Service Award Liability (Note 6) $ $ 304,320 388,134 

Net Position 

Cumulative Results of Operations 623,534 488,774 

Total Liabilities and Net $ Position $ 927,854 876,908 

 

The accompanying notes are an integral part of these statements. 
 Page | 79
 

FY 2018 Annual Management Report
 

Corporation for National and Community Services
 

National Service Trust
 

STATEMENT OF NET COSTS
 

For the Years Ended September 30, 2018 and 2017
 

(in thousands) 

 

UNAUDITED 

 2018 

UNAUDITED 

2017 

Gross Cost: 

Non Federal: 

Operating Cost $ 90,479 $ 167,297 

 

Less Earned revenue: 

Federal: 

Interest Revenue (11,350) (6,699) 

Non Federal : 

Operating Revenue (1,871) (2,851) 

 

Net Cost of Operations $ 77,258 $ 157,747 

 

The accompanying notes are an integral part of these statements. 
 Page | 80
 

 

 

 

 

FY 2018 Annual Management Report
 

Corporation for National and Community Services
 

National Service Trust
 

STATEMENT OF CHANGES IN NET POSITION
 

For the Years ended September 30, 2018 and 2017
 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

2017 

Unexpended Appropriations: 

Unexpended Appropriations - Cumulative $ - $ - 

Budgetary Financing Sources: 

 

Appropriations - Received 206,842 206,842 

 

Appropriations - Used (206,842) (206,842) 

 

Total Budgetary Financing Sources $ - $ - 

 

Total Unexpended Appropriations - - 

Cumulative Results from Operations 

 

Beginning Balance as Adjusted $ 488,774 $ 430,535 

Budgetary Financing Sources 

 

Appropriations Used $ 206,842 $ 206,842 

 

Transfers in/out 5,176 9,144 

 

Total Financing Sources $ 212,018 $ 215,986 

 

Net Cost of Operations 77,258 157,747 

 

Net Change $ 134,760 $ 58,239 

 

Cumulative Results of Operations $ 623,534 $ 488,774 

 

Net Position $ 623,534 $ 488,774 

 

The accompanying notes are an integral part of these statements 
 Page | 81
 

FY 2018 Annual Management Report
 

Corporation for National and Community Service
 

National Service Trust
 

STATEMENT OF BUDGETARY RESOURCES
 

For the Years Ended September 30, 2018 and 2017
 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

2017 

Budgetary Resources 

Unobligated Balance from Prior Year Budget Authority, Net 

(discretionary and mandatory) $ 204,652 $ 198,632 

Appropriations (discretionary and mandatory) 426,909 428,038 

Spending Authority from Offsetting Collections (discretionary 

and 

mandatory) 1,871 2,851 

Total Budgetary Resources $ 633,432 $ 629,521 

 

Status of Budgetary Resources 

New Obligations and Upwards Adjustments (total) $ 270,096 $ 424,870 

Unobligated Balance, end of year 

Apportioned, Unexpired Accounts 359,871 204,198 

Unapportioned, Unexpired 3,465 453 

Unexpired Unobligated Balance, end of year 363,336 204,651 

Expired Unobligated Balance, end of year - - 

Unobligated Balance, end of year (total) 363,336 204,651 

Total Budgetary Resources $ 633,432 $ 629,521 

 

Outlays, Net 

Outlays, Net (total) (discretionary and mandatary) $ 379,252 $ 379,449 

Distributed Offsetting Receipts (212,018) (215,985) 

Agency Outlays, Net (discretionary and mandatary) $ 167,234 $ 163,464 

 

The accompanying notes are an integral part of these statements 
 
 

 

 


 

 
 

FY 2018 Annual Management Report 

Consolidated Notes to Financial Statements 

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. REPORTING ENTITY 

The Corporation for National and Community Service (CNCS) was created by the National and 

Community Service Trust Act of 1993 (Public Law 103-82). CNCS’s mission is to improve 

lives, strengthen communities, and foster civic engagement through service and volunteering. To 

meet its mission, CNCS provides grants and other assistance to states, local communities, and 

nonprofit organizations to help communities meet critical challenges in the areas of education, 

healthy futures, environmental stewardship, economic opportunity, disaster services, and 

assisting veterans and military families through volunteer service. CNCS’s major programs are 

as follows: 

Senior Corps. Senior Corps offers a network of programs that tap into the rich experience, skills 

and talents of older citizens to meet community challenges. Senior Corps comprises the RSVP, 

the Foster Grandparent Program, and the Senior Companion Program. 

AmeriCorps. AmeriCorps provides opportunities for Americans to make an ongoing, intensive 

commitment to service through the following programs: 

 AmeriCorps State, National, Tribes, and Territories (State and National) offers grants 

supporting a broad range of local service programs that engage thousands of Americans 

in intensive service to meet critical community needs. 

 AmeriCorps Volunteers in Service to America (VISTA) helps community organizations 

and public agencies create and expand programs that build capacity and ultimately bring 

low-income individuals and communities out of poverty. 

 AmeriCorps National Civilian Community Corps (NCCC) strengthens communities 

while developing leaders through direct, team-based national and community service. 

B. BASIS OF ACCOUNTING 

CNCS financial statements and footnotes are prepared based on OMB guidance issued in 

Circular A-136, Financial Reporting Requirements. CNCS uses the accrual and budgetary basis 

of accounting based on U.S. Generally Accepted Accounting Principles (GAAP) issued by 

Federal Accounting Standard Advisory Board (FASAB). Under the accrual method of 

accounting, revenues are recognized when earned and expenses are recognized when incurred, 

without regard to the actual collection or payment of cash. Federal budgetary accounting 

recognizes the obligation of appropriations and other funds upon the establishment of a properly 

documented commitment. 

C. USE OF ESTIMATES 

The preparation of financial statements in accordance with GAAP requires CNCS to make 

estimates and assumptions about future events. These estimates and assumptions affect the 

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FY 2018 Annual Management Report 
 

amounts reported in CNCS’s financial statements and accompanying notes. CNCS evaluates its 

estimates and assumptions on an ongoing basis using historical experience and other factors that 

it believes to be reasonable under the circumstances. Adjustments to estimates and assumptions 

are made when facts and circumstances warrant. As future events and their effects cannot be 

determined with certainty, actual results could differ from the estimates used in preparing the 

accompanying financial statements. Significant estimates and assumptions are required as part of 

determining the liability for service awards, grants payable, and grant advances. See Note 6 

“Trust Service Award Liability” for more information about CNCS’s use of estimates to record 

obligations in the Trust. 

D. FUND BALANCE WITH TREASURY 

Fund Balance with Treasury (FBWT) represents cash and cash equivalents in CNCS’s account 

with the Department of the Treasury. Treasury processes cash receipts and disbursements on 

behalf of CNCS and CNCS’s accounting records are reconciled with those of Treasury on a 

regular basis. 

The FBWT maintained in the National Service Trust is restricted to specific purposes, such as 

paying service awards certified as payable to eligible participants, and is not available for use in 

the current operations of CNCS. In addition, the majority of the funds received from individuals 

and organizations for deposit in the Gifts and Contributions fund are restricted for particular 

uses, such as service projects (See Note 2). 

E. OTHER MONETARY ASSETS 

Other monetary assets consists of paper currency and readily negotiable instruments, such as 

money orders, checks, and bank drafts on hand or in transit for deposit. 

F. INVESTMENTS 

By law, CNCS may invest the funds of the National Service Trust in interest-bearing Treasury 

securities guaranteed by the United States as to principal and interest. These Treasury securities 

are referred to as “market-based,” since they mirror actual Treasury securities sold on the open 

market. They consist of Treasury notes, bonds and bills. Since they are expected to be held-tomaturity, CNCS’s investments are valued at cost and adjusted for the amortization of premiums 

and discounts. The premiums and discounts are recognized as adjustments to interest income, 

and are amortized using the level yield/effective interest method for the Notes and straight line 

method for the Bills. 

G. PROPERTY AND EQUIPMENT 

Property and Equipment is stated at full cost, including all costs related to acquisition, delivery, 

and installation, less accumulated depreciation/amortization. Normal maintenance and repair 

costs on capitalized property and equipment are expensed when incurred. CNCS capitalizes 

properties and equipment with an estimated useful life of two years or more based on the 

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FY 2018 Annual Management Report 

thresholds. Capitalized properties are depreciated or amortized on a straight line over their 

estimated useful lives ranging from 2 to 10 years. 

The CNCS’s capitalization policy, Accounting for Capital Property, was updated with an 

effective date May of Fiscal Year 2016. Property and Equipment acquired before this policy was 

implemented that does not meet the new capitalization criteria will be fully depreciated. 

The primary change relates to the capitalization thresholds for each asset type. Prior to the May 

2016 threshold change, CNCS capitalized items with a cost of $50,000 or greater for all asset 

types. 

Effective May 2016, CNCS capitalizes single items of property and equipment with a cost of 

$50,000 or more. Also, CNCS capitalizes bulk purchases of property and equipment with an 

aggregate cost of $250,000 or more. A bulk purchase is defined as the purchase of like items 

related to a specific project, or the purchase of like items occurring within the same fiscal year 

that have an estimated useful life of at least two years. 

In addition, CNCS capitalizes Internal Use Software with an aggregate cost of $250,000 or more. 

Internal Use Software is either purchased off the shelf, internally developed, or contractor 

developed solely to meet the CNCS’s internal or operational needs. Internal Use Software 

developed to meet CNCS’s internal or operational needs will be recognized as capitalized 

Internal Use Software in development if the estimated developmental cost obligated on the 

contract meets the capitalization criteria. Internal Use Software in development will be recorded 

at cost in the fiscal year when they are incurred and paid. The realization of Internal Use 

Software will be recognized in CNCS’s financial records upon completion of the software 

development and when the title is passed to CNCS. (See Note 5) 

H. TRUST SERVICE AWARD LIABILITY 

The Trust Service Award Liability represents unpaid education awards and eligible student loan 

interest forbearance costs, which are expected to be used upon certification. These amounts 

relate to participants who have completed service based on CNCS’s historical experience. 

I. GRANTS PAYABLE 

CNCS awards grants to nonprofit organizations, educational institutions, states, municipalities, 

and other external organizations. Grants become budgetary obligations, but not liabilities, at the 

time they are awarded. 

Although most grantees request funds prior to incurring expenses, some incur expenditures prior 

to initiating a request for disbursement, based on the nature of the expenditures. At the end of the 

fiscal year, CNCS computes and reports an estimate of the amount of unreimbursed grantee 

expenses as grants payable. This accrual is based on an analysis of the amounts actually 

disbursed to grantees in the third quarter. 

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FY 2018 Annual Management Report 
 

J. FEDERAL EMPLOYEE BENEFITS 

ACTUARIAL FECA LIABILITY 

The Federal Employees’ Compensation Act (FECA) provides income and medical cost 

protection to covered federal civilian employees, AmeriCorps NCCC and VISTA members 

injured on the job, employees who have incurred a work-related occupational disease, and 

beneficiaries of employees whose death is attributable to a job-related injury or occupational 

disease. Claims incurred for benefits for CNCS’s employees and members under FECA are 

determined and paid by the Department of Labor (DOL) and later billed to CNCS. CNCS’s 

actuarial liability for workers’ compensation includes costs incurred, but unbilled as of year-end, 

as calculated by DOL. CNCS reimburses DOL for FECA claims out of current appropriations 

upon receipt of a bill from DOL. 

ANNUAL LEAVE 

Annual leave is accrued as a liability based on amounts earned but not used as of the fiscal yearend. Each year, the balance in the accrued annual leave account is adjusted to reflect current year 

pay rates and leave balances. Annual leave is funded from current appropriations when used. As 

unused annual leave is used in the future, financing will be obtained from appropriations current 

at that time. Sick leave and other types of non-vested leave are also expensed when used. 

RETIREMENT BENEFITS 

CNCS’s employees participate in either the Civil Service Retirement System (CSRS) or the 

Federal Employees Retirement System (FERS). FERS was established by the enactment of 

Public Law 99-335. Pursuant to this law, FERS and Social Security automatically cover most 

employees hired after December 31, 1983. Employees hired prior to January 1, 1984 elected to 

join FERS and Social Security or remain in the CSRS. 

For employees covered by CSRS, CNCS contributes 7.0 percent of their basic pay. For those 

employees covered by FERS, CNCS contributes 11.2 percent of their gross pay towards 

retirement. Employees are allowed to participate in the Federal Thrift Savings Plan (TSP). For 

employees under FERS, CNCS contributes an automatic one percent of basic pay to TSP and 

matches employee contributions up to an additional 4 percent of pay, for a maximum CNCS 

contribution amounting to 5 percent of pay. Employees under CSRS may participate in the TSP, 

but will not receive either CNCS’s automatic or matching contributions. 

K. RESTATEMENTS 

Certain prior year amounts have been restated to correct errors in the Balance Sheet, Statement 

of Net Costs and Statement of Changes in Net Positions and Notes to the Financial Statements. 

NOTE 2 – FUND BALANCE WITH TREASURY 

The CNCS is funded with appropriations from Trust Funds and General Funds. While amounts 

appropriated from the General Fund of the Treasury are included in the FBWT, Trust Funds 

investments are not. The Trust Funds investments are redeemed, as needed to meet the cash 

disbursement needs, at which time the funds are transferred from the Trust Fund to FBWT. The 

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FY 2018 Annual Management Report 
 

Trust Fund is for providing education award or student loan interest forbearance expense, 

whereas the General Fund is for operating expenses. The CNCS also uses a Deposit Funds for 

withholding taxes on payments made to contractors. The FBWT for the periods ended September 

30, 2018 and 2017 are as follows: 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

2017 

Fund Balances 

Trust Funds – National Service Trust $ 134,897 $ 9,921 

Trust Funds – Gifts and Contribution 420 825 

General Funds 1,072,512 1,034,464 

Deposit Funds 2,731 2,453 

Total 1,210,560 1,047,393 

 

Status of Funds Balance with Treasury 

Unobligated Balance 

Available 471,529 296,701 

Obligated Balance not yet Disbursed 736,300 748,238 

Non Budgetary FBWT 2,731 2,454 

Total $ 1,210,560 $ 1,047,393 

CNCS’s FBWT is classified as unobligated balance available, obligated not yet disbursed and 

non-budgetary fund balance. Unobligated Balance available represents apportionment for 

obligations in current and unexpired appropriations available for new obligations. Obligated 

Balance not yet disbursed, represents undelivered orders and those delivered but not paid offset 

by Trust Funds investments. Therefore, the unobligated and obligated balances presented may 

not equal related amounts reported on the Consolidated Statement of Budgetary Resources. Non 

budgetary funds refers to deposits funds with no budget authority. 

NOTE 3 – Investments 

By law, CNCS may invest the funds of the National Service Trust in interest-bearing Treasury 

securities guaranteed by the United States as to principal and interest. CNCS’s investments are 

valued at cost and adjusted for the amortization of premiums and discounts Investment are held 

to maturity. Interest income are paid by Treasury semi-annually. As of September 30, 2018 and 

2017, Investment composition was as follows: 

Page | 86 
 Page | 87
 

FY 2018 Annual Management Report
 

UNAUDITED 

2018 

(in thousands) 

U.S. Treasury 

Marketable 

Securities: 

Cost 

Amortized 

(Premium) 

Discount 

Interest 

Receivable 

Investments, 

Net 

Market 

Value 

Bills $ 30,000 $ 254 $ - $ 30,254 $ 30,252 

Notes 756,493 3,752 2,317 762,562 757,820 

Total U.S. 

Treasury 

Marketable 

Securities $ 786,493 $ 4,006 $ 2,317 $ 792,816 $ 788,072 

UNAUDITED 

2017 

(in thousands) 

U.S. Treasury 

Marketable 

Securities: 

Cost 

Amortized 

(Premium) 

Discount 

Interest 

Receivable 

Investments, 

Net 

Market 

Value 

Bills $ 187,421 $ 584 $ - $ 188,005 $ 187,997 

Notes 676,391 877 1,561 678,829 675,902 

Total U.S. 

Treasury 

Marketable Securities $ 863,812 $ 1,461 $ 1,561 $ 866,834 $ 863,899 

 

NOTE 4 – ACCOUNTS RECEIVABLE 

Accounts receivable represents amounts due to CNCS primarily under federal and nonfederal 

reimbursable agreements, grantee audit resolution determinations, outstanding travel advances 

due from employees and Criminal History Check requirements. An allowance for doubtful 

accounts is established for reporting purposes based on past experience. 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

2017 

Federal: 

Accounts Receivable $ 1,142 $ 835 

Non-Federal: 

Accounts Receivable 9,094 10,806 

Allowance for uncollectible (1,634) (2,065) 

 Total 7,460 8,741 

Accounts Receivable, Net $ 8,602 $ 9,576 

 
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FY 2018 Annual Management Report
 

NOTE 5 – PROPERTY AND EQUIPMENT, NET 

CNCS components of property and equipment for the period ending September 30, 2018 and 

2017 are as follows: 

(in thousands) 

UNAUDITED 

2018 

Service 

Life 

(years) Cost 

Accumulated 

Depreciation 

Net Book 

Value 

Equipment 3 - 10 $ 1,264 $ (684) $ 580 

ADP - Internal Use 

Software 2 1,092 (1,092) (0) 

ADP - Internal Use 

Software in Development N/A 27,860 - 27,860 

Total Property and 

Equipment, Net $ 30,216 $ (1,776) $ 28,440 

(in thousands) 

UNAUDITED 

2017 

Service 

Life 

(years) 

Accumulated 

Depreciation 

Net Book 

Cost Value 

Equipment 3 - 10 $ 2,166 $ (1,376) $ 790 

ADP - Internal Use 

Software 2 13,847 (13,847) (0) 

ADP - Internal Use 

Software in Development N/A 23,566 - 23,566 

Total Property and 

Equipment, Net $ 39,579 $ (15,223) $ 24,356 

NOTE 6 – TRUST SERVICE AWARD LIABILITY 

Individuals who successfully complete terms of service in AmeriCorps programs earn education 

awards, which can be used to make payments on qualified student loans or for educational 

expenses at qualified educational institutions. The education award generally must be used 

within seven years of completion date of an approved term of national service. If the education 

award is transferred to an eligible individual or is a Summer of Service award (which was 

available to youth enrolled in grades 6 through 9), the use period is ten years. These awards, as 

well as interest forbearance payments on qualified student loans during the period members 

perform their service, are paid from the National Service Trust Fund. The Service Award was 

composed of the following as of September 30: 
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FY 2018 Annual Management Report
 

(in thousands) 

UNAUDITED 

2018 

UNAUDITED 

2017 

Education Awards $ 3,011,939 $ 2,948,138 

Interest Forbearance 120,197 115,179 

Total estimated service award liability 3,132,136 3,063,317 

Less: cumulative awards paid (2,827,816) (2,675,183) 

Total $ 304,320 $ 388,134 

NOTE 7 – LEASES 

CNCS leases office space through the General Services Administration (GSA). GSA charges 

CNCS a Standard Level Users Charge that approximates commercial rental rates for similar 

properties. The NCCC also leases housing facilities for its campuses. Additionally, CNCS 

leases motor vehicles on an annual basis through GSA under an Interagency Fleet Management 

Service agreement for the NCCC. The leases are renewable with no purchase or escalation 

clause. The following schedule presents future minimum rental commitments under operating 

leases as of September 30 of each year. 

UNAUDITED 

2018 

(in thousands) 

Fiscal Year 

Facilities 

Space 

 

Vehicles Other Total 

2019 $ 10,236 $ 624 $ 224 $ 11,084 

2020 10,565 633 125 11,323 

2021 10,905 643 126 11,674 

2022 11,257 653 78 11,988 

2023 11,619 663 78 12,360 

Total $ 54,582 $ 3,216 $ 631 $ 58,429 

UNAUDITED 

2017 

(in thousands) 

Fiscal Year 

Facilities 

Space Vehicles Other Total 

2018 $ 8,808 $ 659 $ 372 $ 9,839 

2019 9,052 666 373 10,091 

2020 9,304 672 364 10,340 

2021 9,565 679 365 10,609 

2022 9,834 686 365 10,885 

Total $ 46,563 $ 3,362 $ 1,839 $ 51,764 

NOTE 8 – ACTUARIAL FECA LIABILITY 

CNCS’s actuarial liability for future workers’ compensation benefits under FECA was unaudited 

$7.1 million and $ 7.3 million as of September 30, 2018 and 2017, respectively. The amount 

includes the expected liability for death, disability, medical, and miscellaneous costs for 
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FY 2018 Annual Management Report
 

approved compensation cases. As with all Federal agencies CNCS’s FECA liability is 

determined by DOL. The actuarial liability is determined using a method that utilizes historical 

benefit payment patterns related to a specific incurred period to predict the ultimate payments 

related to that period. Consistent with past practice, these projected annual benefit payments 

have been discounted to present value using the Office of Management and Budget’s (OMB’s) 

economic assumptions for 10-year Treasury notes and bonds. 

NOTE 9 – ADVANCES FROM OTHERS 

Advances from Others consists of advances from other federal government entities and 

nonfederal entities related to the interagency and cost share agreements into which CNCS 

entered to provide services. Advances from others primarily consist of Federal Emergency 

Management Agency (FEMA), Environmental Protection Agency (EPA), Department of Justice 

(DOJ), Department of Housing and Urban Development (HUD), and Department of Agriculture 

(USDA) related reimbursable activities. Advances as at September 30, 2018 and 2017 are as 

follows: 

(in thousands) 

UNAUDITED 

 2018 

UNAUDITED 

RESTATED 

2017 

Federal Advances from Others $ 13,611 $ 18,592 

Non-Federal Advances from Others 237 12 

Total Other Assets $ 13,848 $ 18,604 

NOTE 10 – OTHER LIABILITIES 

Other liabilities include amounts owed but not paid at the end of the fiscal year for payroll and 

benefits, AmeriCorps VISTA stipends, the amount of claims for benefits for CNCS’s employees 

under FECA that have been paid by DOL and billed to CNCS but have not yet been reimbursed 

to DOL, other unfunded employment related liability, liability for non-fiduciary deposit funds 

and un-deposited collections, and accounts payable canceled appropriations. Other liabilities for 

the periods ending September 30, 2018 and 2017 are as follows: 
 Page | 91
 

 

FY 2018 Annual Management Report
 

(in thousands) 

UNAUDITED 

2018 

Federal: 

Non-Current 

Liabilities 

Current 

Liabilities 

Total 

Liabilities 

Unemployment Benefits $ - $ 106 $ 106 

Unfunded FECA - 1,838 1,838 

Total Federal Liabilities - 1,944 1,944 

Non Federal: Accrued Funded Payroll & Benefits - 2,486 2,486 

Accrued Volunteer Benefits - 2,653 2,653 

Member Payroll Withholding Taxes - 2,756 2,756 

Accrued Unfunded Member Benefits 889 - 889 

Other Accrued Expenses 338 97 435 

Total Non Federal Liabilities 1,227 7,992 9,219 

Total Other Liabilities $ 1,227 $ 9,936 $ 11,163 

(in thousands) 

 

UNAUDITED 

2017 

Federal: 

Non-Current 

Liabilities 

Current 

Liabilities 

Total 

Liabilities 

Unemployment Benefits $ - $ - $ - 

Unfunded FECA - 1,819 1,819 

Total Federal Liabilities - 1,819 1,819 

Non Federal: Accrued Funded Payroll & Benefits - 2,622 2,622 

Accrued Volunteer Benefits - 2,414 2,414 

Member Payroll Withholding Taxes - 2,572 2,572 

Accrued Unfunded Member Benefits 270 - 270 

Other Accrued Expenses - 187 187 

Total Non Federal Liabilities 270 7,795 8,065 

Total Other Liabilities $ 270 $ 9,614 $ 9,884 

 

NOTE 11 – FUNDS FROM DEDICATED COLLECTIONS 

Funds from dedicated collections are presented on a combined basis. The table below shows the 

balances as of September 30, 2018 and 2017. 

Consolidating Net Position (in thousands) 

UNAUDITED 

 2018 

UNAUDITED 

RESTATED 

2017 

Unexpended Appropriations - Dedicated Collections $ 572,917 $ 578,618 

Unexpended Appropriations - Other Funds 416,152 395,274 

Cumulative Results of Operations - Dedicated Collections 620,171 481,219 

Cumulative Results of Operations - Other Funds 26,173 28,334 

Total Net Position $ 1,635,413 $ 1,483,445 

 
 
 

 

 

 

 

 

FY 2018 Annual Management Report 
 

NOTE 12 – APPROPRIATIONS RECEIVED BY THE NATIONAL SERVICE TRUST 

As of September 30, 2018 and 2017, the National Service Trust received unaudited $206.8 

million and $206.8 million, respectively. Under the provisions included in its annual 

appropriations and under 42 U.S.C. 12601a, CNCS is also authorized to transfer additional 

amounts from subtitle C program funds to the National Service Trust to support the activities of 

national service participants. Under the provisions of the law, CNCS transferred unaudited $5.1 

million and $ 9.1 million to the Trust in FY 2018 and FY 2017, respectively. Accordingly, the 

National Service Trust received a total funding of unaudited $212 million in FY 2018, and 

unaudited $215.9 million in FY 2017, respectively. 

NOTE 13 – COST AND EXCHANGE REVENUE 

Costs for each sub-program are reported on separately: 

AmeriCorps engages members in intense, impact-oriented service to address local community 

needs in areas of education, healthy futures, environmental stewardship, economic opportunity, 

disaster services, and assisting veterans and military families. AmeriCorps includes the State and 

National, NCCC, VISTA programs. The State and National sub-program includes grant 

expenses, as well as direct and allocated personnel and administrative costs including National 

Service Trust operations. The NCCC sub-program includes member stipend and benefits, and 

direct and allocated personnel and administrative costs including AmeriCorps recruitment and 

National Service Trust operations. 

The VISTA sub-program includes grant expenses, member stipend and benefits, as well as direct 

and allocated personnel and administrative costs including AmeriCorps recruitment and National 

Service Trust operations. 

The Senior Corps programs provide opportunities for members 55 and older to address local 

community needs in the areas of education, assisting veterans and military families, disaster 

response, and healthy futures. Senior Corps includes the Foster Grandparent Program (FGP); 

Senior Companion Program (SCP); and RSVP. The Senior Corps programs include grant 

expenses, as well as direct and allocated personnel and administrative costs for RSVP, FGP, and 

SCP. CNCS also has reimbursable agreements with several state agencies whereby CNCS 

awards and administers grants to a list of grantees selected and funded by the State (pass-through 

grants). The activity related to pass-through grants has been reclassified to be associated with 

the related Senior Corps program. 

The National Service Award Expense component consists of the CNCS’s estimated expense for 

education awards based on the increase in its service award liability during the year and interest 

forbearance costs on qualified student loans during the period members perform community 

service. No indirect costs have been allocated to the National Service Award expense 

component. 

Innovation, Demonstration, & Assistance Activities (ID&A Activities) include grants to support 

and encourage new forms of service and volunteering, including the Social Innovation Fund 

Page | 92 
 
 


 

 

 

FY 2018 Annual Management Report 

(SIF). The primary objective of the SIF is to improve the lives of people in low-income 

communities by mobilizing public and private resources to grow innovative nonprofit 

organizations that have evidence of compelling impact in the areas of economic opportunity, 

youth development, and healthy futures. No indirect costs have been allocated to the Innovation, 

Demonstration, & Assistance Activities component. SIF did not receive funding in FY2018. 

The “J Special Authority” is referred to Section 179(j) of the National and Community 

Service Act, as amended (NCSA). This section allows CNCS to reserve not more than 1 percent 

of the total funds appropriated for a fiscal year under section 501 of the NCSA to support 

program accountability activities. 

The Office of Inspector General (OIG) receives a separate appropriation. No indirect costs have 

been allocated to OIG. 

NOTE 14 – NATIONAL SERVICE AWARD EXPENSE 

Members serving in approved national service positions are eligible to earn a service award to 

pay for qualified education expenses. The National Service Trust also pays interest forbearance 

costs on qualified student loans during the period members perform community service. 

CNCS estimates the expense for national service awards based on the increase in its cumulative 

service award liability during the year (see Note 6). The total service award liability as of 

September 30, 2018 and 2017, respectively, has been adjusted to reflect the fact that earned 

awards are not always used. 

UNAUDITED 

2018 

UNAUDITED 

(in thousands) 2017 

Estimated Education Awards $ 167,139 $ 159,331 

Estimated Interest Forbearance 7,884 7,918 

National Service Award Expense $ 175,023 $ 167,249 

NOTE 15 – CONTINGENCIES 

CNCS is a party to various routine administrative proceedings, legal actions, and claims brought 

by or against it, including threatened or pending litigation involving labor relations claims, some 

of which may ultimately result in settlements or decisions against CNCS. In the opinion of 

CNCS’s management and legal counsel, there are no proceedings, actions, or claims outstanding 

or threatened that would materially impact the financial statements of CNCS. 

Certain legal matters to which CNCS is a party may be administered and, in some instances, 

litigated and paid by other federal agencies. Generally, amounts paid in excess of $2.5 thousand 

for Federal Tort Claims Act settlements or awards pertaining to these litigations are funded from 

the Treasury Judgment Fund (TJF). Although the ultimate disposition of any potential TJF 

proceedings cannot be determined, management does not expect that any liability or expense that 

might ensue would be material to CNCS’s financial statements. 

Page | 93 
(in thousands) 

UNAUDITED 

 2018 

UNAUDITED 

2017 

Federal 

Undelivered Orders - Unpaid $ 9,737 $ 14,311 

Undelivered Orders - Paid 772 1,461 

Total Federal Undelivered Orders 10,509 15,772 

Non Federal 

Undelivered Orders - Unpaid 1,066,658 1,106,543 

Undelivered Orders - Paid 65,890 61,098 

Total Non Federal Undelivered Orders 1,132,548 1,167,641 

Total Undelivered Orders $ 1,143,057 $ 1,183,413 

 
 


 

 

FY 2018 Annual Management Report 

NOTE 16 – SUBSEQUENT EVENTS 

CNCS has evaluated subsequent events through November 5, 2018, which is the date these 

financial statements were available to be issued. As a consequence of its evaluation, CNCS has 

determined that no subsequent events need to be recognized or disclosed. 

NOTE 17 - UNDELIVERED ORDERS AT THE END OF THE PERIOD 

CNCS’s undelivered orders as of September 30, 2018 and 2017 are as follows: 

NOTE 20 – EXPLANATION OF THE DIFFERENCES BETWEEN STATEMENT OF 

BUDGETARY RESOURCES AND THE PRESIDENTS BUDGET 

The FY 2020 Budget of the United States Government (President’s Budget), which presents the 

actual amounts for the year ended September 30, 2018, has not been published as of the issue 

date of these financial statements. The FY 2020 President’s Budget is scheduled for release in 

February 2019 and can be found on the OMB website: http://www.whitehouse.gov/omb at that 

time. 

A reconciliation of the FY 2017 Statement of Budgetary Resources to the FY 2019 President’s 

Budget (FY 2017 actual amounts) for budgetary resources, new obligations and upward 

adjustments, distributed offsetting receipts, and net outlays is presented below: 

Unaudited 

Distributed 

Offsetting 

Receipts 

Unaudited 

Budgetary 

 Resources 

Unaudited 

Obligations 

Incurred 

Unaudited 

Net 

(in millions) Outlays 

Combined Statement of 

Budgetary Resources $ 1,598 $ 1,297 $ 218 $ 1,184 

 

Expired Funds (92) (7) 

Budget of the United States 

Government $ 1,506 $ 1,290 $ 218 $ 1,184 

Page | 94 
 
 

FY 2018 Annual Management Report 
 

OTHER INFORMATION 

Summary of Financial Statement Audit and Management Assurances 
 

Table 1. Summary of Financial Statement Audit 

Audit Opinion Disclaimer 

Restatement Yes 

 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Ending 

Balance 

Financial Reporting 1 1 

Trust Fund Unpaid 1 1 

Obligations 

Trust Fund Service Award 1 1 

Liability 

Grants Accrual Payable 1 1 

and Advances 

Undelivered Orders and 1 1 

Accounts Payable 

Property, Plant & 1 1 

Equipment 

Undelivered Orders – 1 1 

Grant 

Prior Year Recoveries 1 1 

Other Liabilities 1 1 

Internal Control Program 1 1 

Total Material 4 6 10 

Weaknesses 

Table 2. Summary of Management Assurances 

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2) 

Statement of Assurance Unmodified , Modified, or No Assurance 

 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Reassessed Ending Balance 

[Name of weakness] 

[Name of weakness] 

[Name of weakness] 

Total Material 

Weaknesses 

Effectiveness of Internal Control over Operations (FMFIA § 2) 

Statement of Assurance Unmodified. Modified, or No Assurance 

 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Reassessed Ending Balance 

[Name of weakness] 

[Name of weakness] 

Total Material 

Weaknesses 

 

Page | 95 
 
 

FY 2018 Annual Management Report 
 

Conformance with Federal Financial Management System Requirements (FMFIA § 4) 

Statement of Assurance Federal Systems conform, except for instances of non-conformance, or do not 

conform to financial management system requirements 

 

Non-Conformances Beginning New Resolved Consolidated Reassessed Ending Balance 

Balance 

[Name of non-conformance] 

[Name of non-conformance] 

[Name of non-conformance] 

Total non-conformances 

Compliance with Section 803(a) of the Federal Financial Management Improvement Act (FFMIA) 

 Agency Auditor 

1. Federal Financial Management 

System Requirements 

No lack of compliance noted, or 

Lack of compliance noted 

No lack of compliance noted, or 

Lack of compliance noted 

2. Applicable Federal 

Accounting Standards 

No lack of compliance noted, or 

Lack of compliance noted 

No lack of compliance noted, or 

Lack of compliance noted 

3. USSGL at Transaction Level No lack of compliance noted, or 

Lack of compliance noted 

No lack of compliance noted, or 

Lack of compliance noted 

Page | 96 
 
 


 


 

 

 

FY 2018 Annual Management Report 

Payment Integrity 

Background 

The Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments 

Elimination and Recovery Act of 2010 (IPERA), and the Improper Payments Elimination and 

Recovery Improvement Act of 2012 (IPERIA), requires the agency to report information on 

improper payments (IP) to the President and Congress through annual financial reports. More 

detailed information on CNCS’s and government-wide improper payments for FY 2018 and 

prior years can be found at https://paymentaccuracy.gov/. 

CNCS currently has identified four programs susceptible to significant improper payments: 

AmeriCorps State and National (AmeriCorps), the Foster Grandparent Program (FGP), RSVP 

(formerly the Retired and Senior Volunteer Program), and the Senior Companion Program 

(SCP). 

Risk Assessment 

All agencies must assess the improper payment risk level for each program that is not already 

reporting an improper payment estimate at least once every three years. If the results of the risk 

assessment demonstrate the program or activity makes over $10M in improper payments 

annually, the program must undergo statistical sampling and reporting. CNCS performed 

qualitative risk assessments on the programs found in the chart below. When determining which 

programs and activities must be assessed, programmatic activities were analyzed by funding 

stream and operational activities were separated by department. CNCS considered the following 

factors when determining whether or not programs and activities were susceptible to significant 

improper payments: 

1. Whether the program or activity reviewed is new to the agency; 

2. The complexity of the program or activity reviewed, particularly with respect to 

determining correct payment amounts; 

3. The volume of payments made annually; 

4. Whether payments or payment eligibility decisions are made outside of the agency, for 

example, by a State or local government, or a regional Federal office; 

5. Recent major changes in program funding, authorities, practices, or procedures; 

6. The level, experience, and quality of training for personnel responsible for making 

program eligibility determinations or certifying that payments are accurate; and 

7. Significant deficiencies in the audit reports of the agency including, but not limited to, the 

agency Inspector General or the Government Accountability Office (GAO) audit report 

findings, or other relevant management findings that might hinder accurate payment 

certification. 

Page | 97 
 Page | 98
 

FY 2018 Annual Management Report
 

Program or Activity Susceptible (Yes/No) 

AmeriCorps NCCC No 

AmeriCorps VISTA No 

AmeriCorps Commission Support Grants No 

Procurement No 

Human Capital (Payroll) No 

Trust No 

Payment Reporting 

Improper and Proper Payment Rates 

Program 

Name 

FY 2018 

Outlays 

($M) 

FY 2018 

IP 

Amount 

($M) 

FY 2018 

IP Rate 

FY 2018 Proper 

Payments 

Amount ($M) 

FY 2018 

Proper 

Payments 

Percentage 

AmeriCorps $244.67 $40.10 16.39% $204.57 83.61% 

FGP $87.25 $18.17 20.83% $69.08 79.17% 

RSVP $40.36 $6.98 17.29% $33.38 82.71% 

SCP $38.09 $10.74 28.20% $27.35 71.80% 

Overpayment and Underpayment Information 

Program 

Name 

FY 2018 

IP 

Amount 

($M) 

FY 

2018 

IP 

Rate 

FY 2018 

Over -

payments 

($M) 

FY 2018 

Over -

payment 

Percentage 

FY 2018 

Under -

payments 

($M) 

FY 2018 

Under -

payment 

Percentage 

AmeriCorps $40.10 16.39% $40.00 99.75% $0.10 0.25% 

FGP $18.17 20.83% $18.11 99.67% $0.06 0.33% 

RSVP $6.98 17.29% $6.98 100.00% $- $-

SCP $10.74 28.20% $10.61 98.79% $0.13 1.21% 

Source of Improper Payments 

Program 

IP Made Directly by 

CNCS ($M) 

IP made by recipients of 

federal money ($M) 

AmeriCorps $0 $39.89 

FGP $0 $18.05 

RSVP $0 $6.98 

SCP $0 $10.48 
 
 

FY 2018 Annual Management Report 
 

Improper Payment Root Cause 

A majority of CNCS’s improper payments fall into the category “Insufficient Documentation to 

Determine,” which occurs when there is insufficient supporting documentation present to verify 

the accuracy of the payment. The payments in this section include those that have missing or 

inadequate administrative documents, such as timesheets, age eligibility forms, etc. This 

category also contains payments where grantees did not perform all of the required National 

Service Criminal History Check (NSCHC) components on national service participants prior to 

the date of the tested transaction or did not provide all supporting documentation for the required 

NSCHC components. The payments that fall into “Program Design or Structural Issues” are 

payments that were made to national service participants where National Service Criminal 

History Checks were properly initiated prior to start of service, but the date of the transaction 

occurred before results had been received. CNCS categorizes payments as improper due to an 

“Administrative or Process Errors Made by: Other Party” when CNCS finds errors in payment 

calculations, if unallowable charges are coded to the grant, and errors that were found and 

corrected. 

Program 

Name Payment Type 

Program 

Design or 

Structural 

Issue 

Administrative 

or Process 

Errors Made 

by: Other Party 

Insufficient 

Documentation

to Determine TOTAL 

AmeriCorps Overpayments $1.29 $15.48 $23.23 $40.00 

AmeriCorps Underpayments - $0.10 - $0.10 

FGP Overpayments - $3.62 $14.49 $18.11 

FGP Underpayments - $0.05 - $0.05 

RSVP Overpayments - $3.28 $3.70 $6.98 

RSVP Underpayments - - - -

SCP Overpayments - $0.91 $9.57 $10.48 

SCP Underpayments - - - -

Improper Payment Corrective Actions by Root Cause 

Program Design or Structural Error 

The payments included in this category represent files with criminal history checks that were 

properly initiated prior to start of service, but results were pending at the time of payment. Since 

results were not received at time of payment, CNCS cannot definitively establish eligibility and 

the payments are considered improper. In these situations the NSCHC has been conducted 

correctly as national service participants are allowed to begin service while checks are pending, 

if they are accompanied by a cleared individual during this time period. This is allowable in 

order to ensure the waiting period for checks does not hinder CNCS’s mission and national 

service as a whole. If the checks show the individual is eligible, CNCS would consider the file 

compliant and no financial loss to the government would result. All funds associated with the 

individual would be recovered if individual was ineligible. Given this is allowable by both 

Page | 99 
 
 

 

FY 2018 Annual Management Report 
 

CNCS policy and regulation, CNCS does not have a corrective action for the payments that fall 

into this category. 

Administrative Errors Made by Other Party 

FY 2018 is the first year CNCS is reporting improper payments in this category. This includes 

payments that CNCS grantees made that were unallowable, improperly coded to the grant, or 

where there was an error that lead to an overpayment or underpayment. FY 2019 will be the first 

year CNCS establishes a corrective action for this root cause. These errors are more difficult to 

address as they are administrative errors made by CNCS funded grantees and are not under the 

control of CNCS. CNCS’s corrective actions will focus on ensure grantees are aware these issues 

are occurring, have access to the information needed, and stress the importance of strong internal 

control and quality assurance checks. 

Planned Corrective Actions 

 CNCS will include this information and these types of errors in its FY 2019 improper 

payments trainings and FAQs. It will include information about proper internal 

control over accurate record keeping and accounting. This will be completed in FY 

2019 and will be a standard part of improper payments training going forward. Since 

CNCS’s improper payments process tests data in the past, it will not see the effects of

this until FY 2020 testing. 

 CNCS plans to create an improper payments website to provide grantees an easy 

place to access necessary law, regulation, policy, and trainings that affect improper 

payments testing. This will be completed in late FY 2019 or early FY 2020 and since 

CNCS’s improper payments process tests data in the past, it will not see the effects of 

this until FY 2020 and FY 2021 testing. 

 The Office of the Chief Risk Officer, CNCS’s office that manages the improper

payments testing process, will share the findings with applicable program and grants 

offices to ensure these topics are covered in regular training and technical assistance. 

Any effects from this training will be seen in FY 2020 testing. 

Insufficient Documentation to Determine 

The majority of the improper payments in this category are related to non-compliant National 

Service Criminal History Checks. By law, NSCHCs are required for all national service 

participants and staff in covered positions. A national service participant is required to have a 

National Sex Offender Public Website (NSOPW) check, a state check, and/or an FBI fingerprint 

based check. If any part of the required check is not completed or is completed incorrectly by 

the time the payment is made, it is considered improper. Typically most improper payment files 

have completed some portions of the required checks, but not all. In the past, CNCS has focused 

on more training and technical assistance to combat the non-compliance identified in grantee 

NSCHC files. CNCS is now implementing additional measures, as seen below. 

Page | 100 
 
 

 

 

 

 

FY 2018 Annual Management Report 
 

Actions Taken in FY 2018 

 CNCS focused much of its time dedicated to NSCHC in FY 2018 to reduce all 

barriers to obtaining a compliant NSCHC. The agency spent the year soliciting a 

contracting action for a vendor that is able to provide compliant NSOPW and state of 

service and state of residence NSCHC checks for grantees. This vendor, in 

conjunction with the FBI channeled vendor that CNCS had already obtained, will 

provide grantees a place where they can receive compliant checks with short 

turnaround times. 

 CNCS continued to train grantees on the requirements of the National Service 

Criminal History check law and stress its importance at all available opportunities. 

 CNCS continued to require, at least one staff person from each grantee, to complete a 

course related to compliance NSCHC. 

Planned Corrective Actions 

 The NSOPW and state vendor mentioned above will be available for grantee use in 

early FY 2019. Given a majority of NSCHC issues that CNCS sees are related to 

NSOPW and state checks, CNCS believes the use of this vendor has the ability to 

significantly impact its improper payment rates. Because data is tested in the past, 

CNCS will not see the impact of this vendor on its improper payment rates until FY 

2020. Depending on the strata pull, it is possible that some effects may be seen in the 

second half of CNCS’s FY 2019 improper payments testing. 

 CNCS is providing an extensive amount of training opportunities to grantees on how 

to correctly access and use the NSOPW and state solution vendor. CNCS will have at 

least 8 training opportunities prior to the end of calendar year 2018. 

 CNCS is revising its NSCHC policies and procedures to both streamline the process 

and encourage use of the contracted vendors by eliminating as many special 

circumstances to compliance as possible. The effect of these policy changes may be 

evident in the second half of FY 2019 improper payments testing and beyond. 

 CNCS anticipates augmenting grants in the first quarter of FY 2019 to make available 

additional funds to grantees who choose to recheck currently serving national service 

participants with the vendors to ensure compliance. The effect of this policy change 

may be evident in the second half of FY 2019 improper payments testing and beyond. 

CNCS continues to see a marginal amount of non-criminal history check related findings during 

its Improper Payment testing. These types of findings typically stem from either non-compliant 

documentation or CNCS not receiving the correct documentation to determine the completeness 

of the file. 

Actions Taken in FY 2018 

 CNCS updated its improper training resources to further stress the required 

documents needed to successfully complete and improper payment review. These 

trainings were given regionally in person and available through webinar. 

Page | 101 
 
 


 

 

FY 2018 Annual Management Report 

 CNCS added an additional staff resource and contractor support for the burdensome 

improper payments process to allow for more follow up to ensure complete files are 

received. 

Planned Corrective Actions 

 With additional staffing resources available, CNCS will begin its improper payments 

testing six months earlier than it has been able to in the past. This will allow for the 

process to be completed earlier, with rolling testing, and adding time for additional 

follow up. Results from these actions may be seen in FY 2019 improper payments 

testing. 

 CNCS is updating all communications to grantees to make them clearer and more 

prescriptive about what documentation is required to complete a successful 

assessment. Effects of this corrective action may be seen in FY 2019 improper 

payments testing. 

 CNCS will continue to offer regular trainings to grantees and will focus on more 

telephonic communication when it is not receiving correct grantee documentation. 

Any effect from this corrective action may be seen in FY 2019 improper payments 

testing. 

Improper Payment Reduction Targets 

Program 

Name 

FY 2018 

Outlays 

($M) 

FY 2018 

IP Amount 

($M) 

FY 2018 

IP Rate 

FY2019 

Est. 

Outlays 

FY2019 

Est. IP % 

FY2019 

Est. IP $ 

AmeriCorps $244.67 $40.10 16.39% $257.67 15.89% $40.94 

FGP $87.25 $18.17 20.83% $89.25 20.33% $18.14 

RSVP $40.36 $6.98 17.29% $42.36 16.79% $7.11 

SCP $38.09 $10.74 28.20% $40.09 27.70% $11.10 

CNCS has established small reduction targets for FY 2019 testing. A majority of CNCS’s 

improper payments stem from non-compliant National Service Criminal History Checks (see 

corrective actions section above for more detail). CNCS anticipates the NSOPW and state 

solution vendor, which will be available for grantee use in early FY 2019, will have an effect on 

the improper payment rate. However, CNCS uses past data and FY 2019 testing will contain 

minimal data from grantees after the vendor is made available. Given this, CNCS does not 

anticipate being able to realize the effects of the vendor fully until FY 2020 testing. Given that, 

the agency expects to see stagnant improper payment rates, with a small decrease due to 

additional follow up made allowable by having additional staff dedicated to completing the 

improper payments testing process. 

Addendum to Improper Payments Reporting 

CNCS performs its improper payments testing in two phases and uses two distinct data pulls. In 

FY 2017, at direction from contracted statisticians, CNCS reported improper payment estimates, 

Page | 102 
 
 


 

 

 

FY 2018 Annual Management Report 

amounts, and reduction targets based upon using a combined extrapolation methodology. During 

the FY 2017 annual improper payments audit, the IPERIA auditors disagreed with this approach 

and suggested CNCS implement a stratified extrapolation approach in FY 2018. CNCS used the 

auditors preferred method of a stratified extrapolation for FY 2018 reporting. The table below 

shows the differences between the FY 2017 combined approach and stratified approach numbers. 

There is a notable issue with the stratified extrapolation approach in 2017. CNCS did not design 

a testing plan under a stratified approach and used an 80/20 data split between data set one and 

data set two. The second data set was not large enough to stand on its own and provide accuracy 

using a stratified approach, which overly influenced the results (see stratified confidence 

intervals below). 

FY 2017 

IP 

Amount 

Combined 

Approach 

(Reported) 

($M) 

FY 2017 

IP Rate 

Combined 

Approach 

(Reported) 

FY 2017 

Confidence 

Interval 

(90%+/ -) 

Combined 

Approach 

FY 2017 

IP 

Amount 

Stratified 

Approach 

($M) 

FY 2017 

IP Rate 

Stratified 

Approach 

FY 2017 

Confidence 

Interval 

(90%+/ -) 

Stratified 

Approach 

Program 

Name 

AmeriCorps 

State and 

National 

$ 26.78 10.80% 2.43% $ 45.46 18.40% 7.43% 

FGP $ 14.07 17.10% 6.87% $ 35.46 43.00% 55.17% 

RSVP $ 3.02 7.40% 2.90% $ 4.95 12.10% 8.64% 

SCP $ 5.68 16.80% 3.57% $ 10.53 31.20% 14.89% 

Recapture of Improper Payments Reporting 

CNCS currently recovers found overpayments in grant programs by establishing debts when 

recoverable overpayments are identified. In other programs and activities overpayments, if 

recoverable, are collected when found. CNCS does not have any payment recapture audit 

programs, therefore no money was recovered via those means. 

OMB A-123, Appendix C requires agencies to conduct payment recapture audits for each 

program and activity that expends over $1M annually, if cost effective. CNCS determined it was 

not cost effective to have payment recapture audits in the following programs: AmeriCorps State 

and National, the Foster Grandparent Program (FGP), the Senior Companion Program (SCP), the 

Retired and Senior Volunteer Program (RSVP), AmeriCorps State Service Commission Support 

Grants, Volunteer Generation Fund, Service Day Grants (MLK, 9/11, and Mayors’ Day), 

Procurement, Human Capital (payroll), AmeriCorps VISTA, AmeriCorps NCCC, Trust, 

Purchase Cards, and Travel Cards. The rationale is found below. 

Page | 103 
 
 

FY 2018 Annual Management Report 
 

AmeriCorps State and National, FGP, RSVP, SCP, AmeriCorps State Service Commission 

Support Grants, Volunteer Generation Fund, and Service Day Grants 

The majority of non-compliance found in these programs is related to non-compliant National 

Service Criminal History Checks. CNCS does not disallow grant costs for this identified noncompliance. Instead, the agency imposes a financial consequence for non-compliance, therefore 

these are not real overpayments, as the money was still owed to the national service participant, 

unless found to be ineligible, and the payment amounts are not recovered. CNCS also does not 

have an easily accessible database of both payments and eligibility and it requires significant 

staff time to determine compliance and rate of financial consequence. The bulk of the remaining 

improper payments found are due to failure to document compliance in other areas and may or 

may lead to cost recovery. Given the limited amount of grant funds that are recoverable and the 

amount of time and staff effort required to identify issues that could potentially be collected 

upon, it is not cost effective to have a separate unit or contract support performing these actions. 

AmeriCorps VISTA and AmeriCorps NCCC 

The majority of the activities and payments for these grant and project programs is administered 

at the federal level. On occasion, CNCS will find duplicate payments to members, but the 

amounts paid are low and are therefore not significant. It is not cost effective to dedicate staff or 

contracting support solely to payment recapture because the amounts recovered would be 

minimal. 

Payroll 

There are not significant payroll errors made at the federal level as information is processed 

through both CNCS’s Human Capital Office and USDA’s National Finance Center. In addition, 

when overpayment errors are discovered, they are immediately handled and recovered by 

offsetting upcoming employee pay, and would be recovered with or without a recovery audit 

program. 

National Service Trust 

To have recoverable funds from the National Service Trust, either a member would have to be 

found to be ineligible after completion of their term of service or funds would be received by an 

ineligible educational institution. Eligibility of the member is determined by the grantee, 

eligibility of the payment is determined by the educational institution, and the eligibility of the 

educational institution is determined by the United States Department of Education. To date, 

CNCS has not discovered a significant frequency of ineligible recipients of education awards and 

does not deem it cost effective to have a payment recapture audit program. 

Purchase Cards and Travel Cards 

CNCS does not have large outlays for purchase and travel cards. These payments go through 

random audits prior to final approval of payment. There is not a significant amount of 

overpayments found in these processes. In addition, the outlays are very small, less than $5 

Page | 104 
 
 

 

FY 2018 Annual Management Report 
 

million, so the opportunity for overpayments is small. CNCS does not believe it is cost effective 

to have a separate payment recapture audit program for purchase cards or travel cards. 

Barriers 

As reported in prior years, CNCS continues to face one significant barrier to reducing its 

improper payments. CNCS’s NSCHC law requires multiple components for a compliant check 

that are only available from selected sources. CNCS is currently working on a strategy to 

remediate this issue by maintaining access to vendors that can provide compliant checks to 

grantees. Please see the corrective action plan section for more information. 

Accountability 

Beginning in FY 2018, CNCS’s Chief Executive Officer designated the Program Directors of its 

four susceptible grant programs, the Chief Risk Officer, the head of the Improper Payment 

testing program, as agency designated accountable officials for the results in the programs they 

lead. Prior to FY 2018, the agency’s Chief Operating and Chief Risk Officers were designated as 

the accountable officials overseeing the implementation of the payment integrity program. . 

Program Directors and the Chief Risk Officer are now held responsible for addressing findings 

of noncompliance for their respective areas and to put measures in place to achieve a reduction in 

improper payments. 

Agency Information Systems and Other Infrastructure 

In the four programs deemed susceptible to significant improper payment, CNCS is addressing 

whether it has the necessary internal control systems, human capital, and information systems it 

needs to reduce improper payment levels to the established reduction targets. CNCS continues its 

on-going assessment of the systems needed to reduce its improper payment rates. 

Internal Control 

CNCS does not have direct control over the individual payments made or the internal control 

systems needed to prevent improper payments at the grantee level. CNCS continues to work to 

improve detection of improper payments and to strengthening grantees to ensure internal control 

systems are in place to reduce CNCS’s improper payment rates. Ongoing actions include: 1) 

improving CNCS’s annual grantee risk assessment to evaluate, identify, and timely address risks 

associated with the grant activities; 2) continuing financial, programmatic training, and technical 

assistance to both CNCS and grantee staff; and 3) conducting monitoring and site visits for 

grantees. 

Human Capital 

CNCS has added additional staff and contracting resources to ensure that planned testing levels 

are achieved. The additional staff and resources assist in assuring more aggressive follow up 

with grantees is performed to ensure all relevant documentation is collected and no proper 

payments are erroneously reported as improper due to failure to collect all information. 

Page | 105 
 
 

 

 

 


 

 

 

 

 

 

 

 

FY 2018 Annual Management Report 

Information Systems 

CNCS is undergoing an IT Modernization effort that will provide a more comprehensive 

workflow and serve as a system of record for all pre and post award information. This will allow 

the agency more visibility on the challenges facing the grant portfolio, which could, in turn, 

assist in understand how to better address root causes of improper payments made at the grantee 

level. 

Sampling and Estimation 

CNCS uses the same sampling methodology for all four susceptible grant programs. CNCS’s 

grantees report the amount of their payments charged to grant funds every six months, with 

period ending dates of either March 31 and September 30 or June 30 and December 31, by 

completing the Federal Financial Report (FFR) information in CNCS’s online grants 

management system. However, due to the timing of the submission of the FFRs by grantees, the 

improper payment estimates produced by this approach will not be based on payments made 

within any given federal fiscal year. Instead, CNCS must utilize data reported during the second 

half of the previous fiscal year and the first half of each current fiscal year in order to provide a 

complete improper payment estimate. 

For the FY 2018 improper payments assessment, a multi-stage sampling method was adopted for 

each grantee program that CNCS management determined to be susceptible to significant 

improper payments. 

In the first stage, statisticians selected a random sample of FFRs from each program. In 

particular, the first stage sample was selected using a probability proportional to size (PPS) 

sampling methodology, specifically PPS with replacement.1 

For each selected FFR, CNCS requested the grantee provide general ledger entries (GLs) or 

other accounting system records which support the information submitted on the FFR. CNCS 

then selected a second stage sample of GL entries2 using a simple random sampling method.3 If 

the randomly selected GL entry was a payment to an individual or a vendor (excluding a vendor 

acting as a payment agent or service provider making payments on behalf of the grantee), then 

no further sampling was required and this payment was evaluated. If the GL entry was an 

intermediary payment or a payment to a vendor acting as a payment agent or service provider, 

then CNCS requested the supporting data for that entry and performed additional simple random 

1 In theory, the PPS with replacement sampling method is similar to the monetary unit sampling, which is frequently used by auditors to test 

financial accounts. With PPS with replacement, the probabilities of selection remain proportional to sizes at each selection and the formulas for the 

estimated variances of the estimates are straight forward (refer to Cochran’s Sampling Techniques, 3rd Edition, Chapter 9A, for details). In practice, 

these two approaches usually lead to results with minimal difference. 

2 Depending on the FFR selected from the 1st stage, the GLs selected in the 2nd stage may be a GL entry or a GL transaction. The multi-stage 

sampling stops whenever a single payment transaction is selected. 

3 A simple random sampling is a method of selecting n units out of a population with size N such that each such sample has an equal chance of 

being drawn. 

Page | 106 
 
 

FY 2018 Annual Management Report 
 

sampling on the supporting data until an assessable payment was selected. At least two items 

were selected at each stage of sampling. 

The table below summarizes the estimated 1st stage sample size of FFRs for each program in 

order to achieve a relative precision of 10.0 percent at the two-sided confidence level of 90.0 

percent. 

Program N (Universe) Total FFR Amount Sample Size (FFRs) 

(+/ -10.0% Precision) 

AmeriCorps 374 $247,075,456.07 54 

FGP 557 $82,558,121.39 150 

RSVP 1,066 $41,024,591.35 37 

SCP 304 $33,805,727.31 89 

Total 2,301 $404,463,896.12 330 

Improper Payments Errors 

When CNCS determines that the sampled transaction is improper based on assessment of the 

supporting documents provided by the grantee, CNCS will consider the error as Improper 

Payment. Statisticians extrapolate Improper Payments to the 1st stage using ratio estimators and 

then to the FFR population using a PPS estimator. CNCS uses two separate data pulls to 

complete its testing, therefore a stratified approach is used for the extrapolation. 

PPS Extrapolation Formulas 

Statisticians will stratify the sample results from the 1st sample and the 2nd sample and perform 

extrapolation using the stratified sample results as follows. 

 The PPS estimator will be used to extrapolate the Improper Payment Errors. The PPS 

estimate of the total error amount is as follows: 

Ŷ 1 y x = ∑n i

 z = i

i=1		 , where i n zi ∑N x i=1 i 

In the above formula, Ŷ is the total projected dollar amount in error, yi is the dollar 

amount in error for the i

th sampled FFR, zi is the probability that the ith FFR was selected, 

x is the dollar amount on the i

th 

i FFR, n is the number of sampled FFRs in the program, 

and N is the population number of FFRs. 
 

The estimated variance of the PPS estimate for total error amount is: 
 

y 2 

∑n i ̂ i=1 ( − Y) z V(Ŷ) = i

n(n − 1) 

 For errors in the 2nd or later stages, Improper Payments will first be extrapolated to all 

transactions within each sampled FFR using ratio estimators. Then the projected errors in 

the sampled FFR will be extrapolated to all FFRs in the first stage population using the 

PPS estimator as described above. 

Statisticians performs these extrapolations for each program separately. 

Page | 107 
 
 

 

FY 2018 Annual Management Report 
 

Fraud Reduction Report 
 

On June 30, 2016 the president of the United States signed into law the Fraud Reduction and 

Data Analytics Act of 2015 (Public Law No.114-186). This legislation emphasizes the 

importance for federal agencies to identify, assess, and address fraud risks. Since the enactment 

of the law, CNCS has reinforced its anti-fraud efforts through the following activities. 

A- Agency-wide Mandatory Fraud Awareness Training 

The Agency Designated Ethics Official conducts an annual ethics training that includes fraud 

awareness. The training is based on a curriculum jointly developed with the Office of the 

Inspector General (OIG) Investigations Unit. Prior to the fourth quarter of FY 2016, the ethics 

training was required only for public and confidential filers and the fraud awareness training was 

reserved to the Office of the Inspector General personnel. Today, 100% of CNCS employees at 

headquarter and in regional offices takes a mandatory one hour Ethics and Fraud Awareness 

training each year. As a result, CNCS is increasingly becoming a fraud aware organization, 

where employees are trained on how to recognize and report fraud. 

B- Implementation of the GAO’s Framework for Managing Fraud Risks In Federal 

Programs 

To build upon the fraud prevention initiatives started in FY2016, OCRO initiated in FY2017 the 

implementation of the GAO’s Framework for Managing Fraud Risk in the Federal Government. 

1. Fraud Risk Management Governance Body 

In order to demonstrate its commitment to combating fraud, the Corporation created a fraud risk 

subcommittee of its risk assessment committee, composed of senior-level managers from offices 

whose programs were deemed susceptible to fraud. The members of this fraud risk governance 

body include the Chief Financial Officer (CFO); Director of Procurement Services; Chief Human 

Capital Officer (CHCO); Chief Information Officer (CIO); Deputy General Counsel; Chief 

Grants Officer (CGO); Chief Program Officer (CPO); and the Chief Risk Officer. The members 

of this body were selected across functional areas. The cross-functional nature of the team fosters 

the breakdown of silos in fraud risks assessment and also helps identify fraud risk interactions 

across functions. The roles of this body include identifying and analyzing fraud risk and 

providing effective oversight to the internal controls over fraud risks. 

2. Update of the Corporation’s Fraud Risk Profile

Under the oversight of the fraud risk subcommittee, OCRO has created the agency’s first fraud 

risk profile. The members of the subcommittee identified thirty five (35) inherent fraud risks that 

were assessed on a two-dimensional criteria: likelihood and impact. Those risks were both 

mission and mission-support related. CNCS’s internal control program (ICP) identified the 

counter measures (existing fraud prevention and detection controls) that were designed and 

implemented to address those risks. In FY 2018, as part of its risk-based rotational control 

Page | 108 
 
 

FY 2018 Annual Management Report 
 

testing, the ICP assessed the operating effectiveness of 48% of the identified fraud risk controls 

and found them to be effective. In FY 2019, the ICP will test the remaining fraud risk controls 

and provide the relevant recommendations to strengthen those controls that would be found to be 

deficient. 

Statutory Authority Penalty 

Year 

Enacted 

Latest 

Year of 

adjustment 

Current 

Penalty 

Level 

Sub - 

Agency/Bureau

Unit 

Location of 

Penalty Update 

Details 

Pub. L. 101-121, 

Sec. 319, (31 

U.S.C. 1352); Pub. 

L. 93-113; 42 U.S.C. 

4951, et seq.; 42 

U.S.C. 

5060 

The penalty 

associated 

with 

Restrictions 

on 

Lobbying 

(45 CFR 

1230.400) 

1990 2018 The current 

range of civil 

monetary 

penalties 

related to 

Restrictions 

on Lobbying 

is from 

$19,639 to 

$196,387. 

Corporation for 

National and 

Community 

Service 

82 Fed. Reg. 

1606 

(Jan. 5, 2018) 

Pub. L. 99-509, 

Secs. 6101-6104, 

100 Stat. 1874 (31 

U.S.C. 3801-3812); 

42 U.S.C. 

12651c12651d 

The penalty 2006 2018 

associated 

with the 

Program 

Fraud Civil 

Remedies 

Act (45 

CFR 

2554.1) 

The upper 

limit 

for civil 

monetary 

penalties for 

the 

Program 

Fraud 

Civil 

Remedies 

Act of 1986 

is 

$11,181 

Corporation for 

National and 

Community 

Service 

82 Fed. Reg. 

1606 

(Jan. 5, 2018) 

Grants Oversight & New Efficiency (GONE) Act Requirements 
 

Civil Monetary Penalty Adjustment for Inflation 

The agency was successful in closing out its aged, expired awards in the past year. This success 

primarily rises up from establishing data analytics positions in FY 2018 to direct and maintain 

attention to business data metrics to inform management as well as using analytics to identify 

opportunities for performance improvement. The corrective action implemented last year to 

improve tracking of expired, but not closed, grants contributed to the closing of 88% of these 

outstanding awards. Frequent sharing of higher quality and more detailed status information 

among programmatic and operations level staff contributed to the gains in closeout work. 

Importantly, the undisbursed grant fund balance was reduced to less than half a million dollars 

from approximately $1.7 million. All of the 30 oldest grants identified to OMB in 2017 for 

GONE Act reporting compliance have since been closed. Twenty four, of last year’s 197* grants 

expired more than 2 years remain open. The 24 grants pending closeout are delayed due to 

technological, fiscal or administrative challenges, such as reconciliation between reports and 

system data, unresponsive or closed grant recipient offices, and nonconforming legacy grant 

Page | 109 
FY 2018 Annual Management Report 

system data. The agency is committed to continuing the positive trend of using data analytics to 

maximize results, as well as refining our tracking and sharing of information with appropriate 

staff to follow up on closeouts in a timely manner. 

Reference: FY 2017 GONE Act Narrative Submission: 

The challenges delaying grant closeout have been less than optimum staffing levels in grant 

offices, workloads that emphasize devoting staff to the priority of awarding one-year annual 

appropriated funds prior to expiration dates, delayed appropriations leading to the need to 

award incremental funding actions rather singular awards, and technology related challenges 

associated with reconciling legacy records which originated in retired grant making systems. 

Also, at times, unresponsive or out-of-existence recipients contribute to delays. Planned 

corrective actions include, but are not limited to, improving and stabilizing the tracking of 

expired but not closed grants, and more frequent sharing of status information with operationslevel staff responsible for the closeout work. 

Reference: Reported in FY 2017* 

 
 


 

 

 

Category 2 -3 years  3 – 5 

years 

 5 years Total 

Number of Grants with Zero 

Dollar Balances 

25 29 109 163 

Number of Grants with 

Undisbursed Balances 

18 13 3 34 

Total Number of Grants 43 42 112 197 

Total Amount of 

Undisbursed Balances $1,284,525.61 $333,612.32 $50,290.00 $1,668,427.93 

FY 2018 Update to the Table Reported in FY 2017* 

Category 2 -3 years  3 – 5 years  5 years Total 

Number of Grants with Zero 

Dollar Balances 

4 4 3 11 

Number of Grants with 

Undisbursed Balances 

5 7 1 13 

Total Number of Grants 9 11 4 24 

Total Amount of Undisbursed 

Balances $137,593.51 $250,510.97 $9,454.00 $397,558.48 

Page | 110 

* Note: There were two aged expired grants that were missed in our FY 2017 reporting. Since 

our FY 2017 report CNCS have made grant tracking improvements that identified the missed 

grants. They are not reflected in the table above and were not submitted in MAX.gov due to 

instructions from Health and Human Service (HHS) to restrict reporting to the grants identified 

in FY 2017. 
 
 

 

Table 1A shows the planned activity for the current Fiscal year and actual enrollments to date 

against the plan. Table 1B includes similar data on the prior Fiscal year for comparative 

purposes. Member positions (slots) classified as “Certified Not Awarded” have been approved 

by CNCS’s CEO for award to grantees, but for which the final grant award has not been 

executed. For budgetary purposes these positions are considered commitments in the Trust 

Fund. Positions classified as Planned not Certified have not yet been approved by the CEO. 

FY 2018 Annual Management Report 
 

National Service Trust Fund Status Report 
 

The National Service Trust Fund (the Trust) was established by the National and Community 

Service Trust Act of 1993 (the Act), 42 USC 12601, et seq. to provide funds for Segal 

AmeriCorps Education Awards for eligible participants who complete AmeriCorps service. 

Funding comes from appropriations, interest earned, transfer of program dollars, proceeds from 

the sale or redemption of Trust investments, partnerships with other agencies, and funds 

collected from disallowed or improperly awarded Education Awards. The Trust is also 

authorized to accept gifts or bequests, Sponsorships, and funds from federal partners. Under the 

Act, funds are available to repay qualified student loans, pay educational expenses at qualified 

educational institutions, and repay eligible interest expense on student loans. 

The value of an education award depends on the term of service performed by an AmeriCorps 

member. For Fiscal Year 2018, completion of a full-time term of service, requiring a minimum 

of 1,700 hours of service, entitles an AmeriCorps member to an education award of $5,920. 

Completion of a part-time term, requiring a minimum of 900 hours of service, entitles an 

AmeriCorps member to an education award of $2,960. Reduced part-time terms, which provide 

awards of $333 to $2,255, are also offered. The education award is indexed to the maximum 

federal Pell grant; therefore these amounts may change each year. 

Education awards earned by AmeriCorps members are generally available to be used for seven 

years from the completion of the service. Payments are made directly to the educational 

institutions and the loan holders as directed by the members and by the institutions. Trust funds 

are not used to pay member stipends or other grant costs. Beginning in Fiscal Year 2010, 

AmeriCorps State and National and Silver Scholar members who are age 55 or older when they 

begin service may also transfer the education award to a qualified child, grandchild, or foster 

child. 

During 2018, 1,142 members received reduced awards because they would otherwise have 

received more than two full awards and 20,634 awards lapsed partially or completely unused. 

No additional positions will be able to be made available from the current surplus beyond the 

number of awards reported elsewhere in this document. 

Page | 111 
 
 

 


 

 

 

 

 

 

 

 

 

 

 

 

FY 2018 Annual Management Report 

Table 1A: AmeriCorps Member Position Award Activity 

AmeriCorps Member Position Award Activity 

Fiscal Year 2018 

Awarded 

Enrolled 

Awarded Not 

Enrolled 

Certified Not 

Awarded Program Certified Total 

State & National 29,982 36,675 - - 66,657 

VISTA 6,106 - 414 0 6,520 

NCCC 1,095 - 105 - 1,200 

Total 37,183 36,675 519 0 74,3771 

Table 1B: AmeriCorps member Position Award Activity 

AmeriCorps Member Position Award Activity 

Fiscal year 2017 

Planned 

Not 

Certified 

Awarded 

Enrolled 

Awarded Not 

Enrolled 

Certified Not 

Awarded Program Total 

State & National 59,116 5,441 4,999 - 69,556 

VISTA 7,066 0 0 - 7,066 

NCCC 1,192 0 8 - 1,200 

Total 67,374 5,441 5,007 - 77,8222 

Trust Awards 

Since CNCS's inception in 1993, AmeriCorps members have earned over $3.75 billion in Segal 

AmeriCorps Education Awards and used over $2.71 billion of that amount to fund their 

education and repay student loans. In addition, CNCS has made $120.2 million in interest 

forbearance payments. Approximately $447.76 million in education awards earned have expired 

without being used. The Trust obligation formula has been adjusted to reflect these expired 

awards. 

1 The 74,377 Trust positions planned for Fiscal year 2018 do not include an estimated 1,300 AmeriCorps VISTA 

members (1100 full time and 200 Summer Associates) who elected an end-of-service stipend instead of an education 

award. Total estimated member positions for Fiscal Year 2018, including VISTA members electing a stipend, is 

75,677. Member enrollment and slot data are periodically adjusted to reflect corrections and slot reconfigurations 

by grantees; therefore they may change slightly from month to month. 

2 The 77,822 Trust positions for Fiscal Year 2017 do not include an estimated 1,500 AmeriCorps VISTA members 

(1,300 full time and 200 Summer Associates) who elected an end-of-service stipend instead of an education award. 

Total estimated member positions for Fiscal Year 2017, including VISTA members electing a stipend, is 79,322. Of 

the 7,066 VISTA member positions in the Trust for 2017, 1,835 positions are for Summer Associates who receive a 

Trust award of $1,175. 

Page | 112 
 
 

Table 4: Factors Affecting the National Service Trust Fund 


 

 

FY 2018 Annual Management Report 

Refilled Positions 

CNCS policy allows grantees limited flexibility to refill positions vacated by a member who has 

served less than 30 percent of his or her service term, provided that the departing member had 

not earned a pro-rated education award. To prevent over-enrollment, the policy includes “fail 

safe” triggers that restrict the overall number of refills to no more than 5 percent of awarded 

positions and suspends refilling altogether if total AmeriCorps enrollment reaches 97 percent of 

awarded positions. Table 3 Number of Refilled Positions, provides information on the number 

of positions refilled. Positions in Fiscal Years 2010 and earlier can no longer be refilled. 

Table 3: Number of Refilled Positions 

Number of Refilled Positions 

Fiscal Years 

Fail -safe 2013 2014 2015 2016 2017 2018 Trigger 

Number of Refilled Positions 1,200 1,131 1,158 1,030 876 0 N/A 

Refills as a Percent of Awarded 1.88% 1.81% 1.87% 1.57% 1.57% 0.00% 5% State & National Positions 

State & National Enrollment as 

a Percentage of Awarded 98.5% 99.3% 98.1% 93.6% 91.6% 45.0% 97% 

Positions 

Table 4 shows the most significant factors used to calculate Trust obligations on a historical 

basis. It is important to note that Fiscal Year refers to positions awarded with a particular fiscal 

year’s grant funds. Positions are often filled in time periods after the year in which they are 

awarded. For example, a grantee may receive a grant in fiscal year 2017 but not fill all positions 

until fiscal 2018. All positions related to this grant would be considered Fiscal Year 2017 

positions, irrespective of the fiscal year in which they are filled. The Reduced Part-time category 

below includes Reduced Halftime, Quarter time, Minimum time, and AmeriCorps Affiliates. 

Factors Affecting the National Service Trust Fund 

Fiscal Year 

2014 2015 2016 2017 2018 

Member enrollments in the Trust 70,649 68,950 70,172 67,891 37,621 

Percent of members who earned an 83.41% 83.14% 82.85% 81.79% 63.25% education award 

Percent of earned education awards 67.08% 59.11% 47.05% 25.88% 19.40% used 

Breakout of enrollment by term type: 

 Full-time 54% 54% 51% 50% 73% 

 Part-time 12% 13% 14% 14% 7% 

 Reduced Part-time 34% 33% 36% 36% 20% 

The Fiscal Year data used throughout these tables reflect all enrollments recorded through the 

reporting period. Prior year enrollment numbers may change slightly from time to time due to 

corrections or late reporting by grantees. The percentage of members who earned an award in 

Page | 113 
 
 


 

 

FY 2018 Annual Management Report 

Table 4 is calculated by taking the number of members who earned an award divided by the total 

number of members who have ended service. For example, for 2017: 

 

Enrolled: 67,374 

Still Earning: 5,441 

Completed: 61,933 (Enrolled less Still Earning) 

Awards 

Earned: 47,834 

% Earned: 77.24% (Awards Earned divided by Completed) 

Tables 5 and 6 present information on the budgetary resources and obligations of the Trust, 

including the Trust Reserve. The schedules present information on a budgetary basis, which 

represents the accounting used to determine compliance with the Anti-Deficiency Act. CNCS 

records Trust obligations at the time it awards AmeriCorps State & National grants or at the time 

it enters into an enforceable agreement with AmeriCorps VISTA and NCCC members. 

The amounts obligated in the Trust are based on the estimated value of the education benefit 

discounted for the estimated enrollment, earning and usage rate and the time value of money. 

For fiscal 2018, these factors are the full value of the Segal AmeriCorps Education Award, a 100 

percent enrollment rate (which allows for refills), an average earning rate of 84 percent (which 

ranges from 77 to 86 percent depending on term type), and an average usage rate of 87 percent. 

Under the National and Community Service Act, as amended, awards earned by members over 

age 55 can be transferred to an eligible beneficiary. For budgetary purposes we project that all 

transferable awards will eventually be used. Obligations are periodically adjusted to reflect 

current earning and usage projections." 

FEMA Corps is a unit of AmeriCorps' National Civilian Community Corps (NCCC) whose 

members are devoted solely to FEMA disaster response, and recovery efforts. The five-year 

agreement provides for a service corps which compliments and supports FEMA's current disaster 

workforce. While FEMA provides funding for the Education Awards for the FEMA Corps 

members, they are shown in tables 5 and 6 as part of our budgetary and obligation activity. 

Page | 114 
FY 2018 Annual Management Report 

 
 


 

Page | 115 

Table 5: Schedule of Budgetary Activity 

Corporation for National and Community Service 

National Service Trust 

Schedule of Budgetary Activity 

For the Year Ended September 30, 2018 

(in thousands) 

Recovery Act Other 

 

FEMA 

Corps 

General 

Fund 

Consolidate 

d 

Funds Available at October 1 $ 1,882 3 605 151,964 154,455 

 Reserve Funds - - 3,500 46,697 50,197 

 Total Starting Funds 204,652 5,382 3 605 198,661 

Budgetary Resources 

 Fiscal Year Appropriation 88 - 1,837 210,350 212,275 

 Less Unapportioned - - - 5,176 5,176 

Deobligation Prior Year Positions 

(net) - - - 140,216 140,216 

Collection of Audit 

Receivables - - - 76 76 

Less: Additions to Trust 

Reserve - - - - - 

 Total Budgetary Resources $ 5,470 $ 3 $ 2,442 $ 554,480 $ 562,396 

Obligations 

 Education Awards (189,855) $ (84) $ - $ (2,004) $ (187,767) $ 

 Interest Forbearance (12,663) (4) - 5,314 (17,974) 

 Total Obligations (202,519) $ (88) $ - $ 3,309 $ (205,740) $ 

Commitments 

 Education Awards $ - $ - $ - $ 196 $ 196 

 Interest Forbearance (196) - - - (196) 

 Total Commitments - - - - - 

 Less Funds in Reserve (50,197) (3,500) - - (46,697) 

Funds Available for $ Obligation 1,882 $ 3 $ 5,751 $ 302,043 $ 309,680 
 
 


 

 

FY 2018 Annual Management Report 

Table 6: Schedule of Trust Obligations 

Corporation for National and Community Service 

National Service Trust 

Schedule of Trust Obligations 

As of September 30, 2018 

(in thousands) 

Trust 

FEMA 

Corps 

Consolidated General 

Fund Resources Recovery Act Trust Other 

 Fund Balance with Treasury $ 6,588 $ 56 $ 1,292 $ 126,960 $ 134,897 

 Investments, Net 2,008 - 10,086 778,405 790,499 

 Interest Receivable 3 - 14 2,301 2,317 

 Accounts Receivable - - - 141 141 

 Subtotal 8,599 56 11,392 907,807 927,854 

Less: 

 Cumulative Trust Reserve (3,500) - - (46,697) (50,197) 

Receivables Not Available for 

Obligation (18) - (55) (6,392) (6,464) 

 

Unapportioned - - (89) (3,333) (3,421) 

 Total Resources $ 5,081 $ 56 $ 11,249 $ 851,386 $ 867,771 

 

Unliquidated Obligations 

 Education Awards $ (3,097) $ (50) $ (10,857) $ (536,324) $ (550,328) 

 Interest Forbearance (102) (2) 5,360 (13,019) (7,764) 

 Total Unliquidated Obligations (3,199) (52) (5,498) (549,343) (558,092) 

 

Commitments 

 Education Awards - - - 196 196 

 Interest Forbearance - - - (196) (196) 

 Total Commitments - - - - - 

 

 Funds Available for Obligation $ 1,882 $ 3 $ 5,751 $ 302,043 $ 309,680 

 

Enrollment Activity 

Table 7 presents cumulative data to date on Trust enrollments, education awards earned and used 

for Fiscal Years 1994 through 2018 as well as Recovery Act positions. 

Page | 116 
FY 2018 Annual Management Report
 

 Page | 117
 

Table 7: Trust Enrollment Activity 

Trust Enrollment Activity – Fiscal Years 1994 through September 30, 2018 

Fiscal 

Year Type Members Enrolled 

Members 

Earning 

or Not 

Exited 

Earned 

Award 

Did Not 

Earn 

Amount 

Earned 

Amount 

Used 

1994 

through 

2009 

Full Time 405,978 4 324,847 81,127 1,498,770,098 1,213,162,742 

Part-time 165,541 1 110,737 54,803 252,850,096 181,378,850 

Reduced Part-time 229,806 3 181,159 48,644 201,985,928 154,237,545 

 Total 801,325 8 616,743 184,574 1,953,606,122 1,548,779,137 

Rec_Act Full Time 7,908 0 6,653 1,255 31,022,831 25,216,090 

Rec_Act Part-time 1,662 0 1,221 441 2,818,344 1,933,903 

Rec_Act Reduced Part-time 4,297 0 3,592 705 4,186,393 3,043,025 

 Total 13,867 0 11,466 2,401 38,027,568 30,193,019 

2010 Full Time 37,721 5 33,286 4,430 175,564,059 146,677,810 

2010 Part-time 11,430 4 8,784 2,642 22,961,157 16,228,715 

2010 Reduced Part-time 39,211 4 31,759 7,448 38,779,558 28,136,704 

 Total 88,362 13 73,829 14,520 237,304,774 191,043,228 

2011 Full Time 35,764 2 31,465 4,297 170,191,819 137,755,338 

2011 Part-time 10,351 2 8,377 1,972 22,515,239 15,007,126 

2011 Reduced Part-time 33,085 1 27,116 5,968 35,393,399 25,506,446 

 Total 79,200 5 66,958 12,237 228,100,456 178,268,910 

2012 Full Time 36,273 4 31,895 4,374 171,046,684 134,477,006 

2012 Part-time 9,577 2 7,771 1,804 21,026,223 13,568,417 

2012 Reduced Part-time 29,146 7 23,841 5,298 31,582,835 21,908,581 

 Total 74,996 13 63,507 11,476 223,655,742 169,954,003 

2013 Full Time 37,043 7 32,237 4,799 173,370,360 130,649,230 

2013 Part-time 8,783 0 6,889 1,894 18,664,779 11,051,727 

2013 Reduced Part-time 25,315 1 20,519 4,795 27,593,107 18,285,640 

 Total 71,141 8 59,645 11,488 219,628,246 159,986,597 

2014 Full Time 37,969 12 32,783 5,174 179,130,939 124,461,737 

2014 Part-time 8,662 1 6,746 1,915 18,555,164 9,643,124 

2014 Reduced Part-time 24,018 6 19,380 4,632 26,420,617 16,232,835 

 Total 70,649 19 58,909 11,721 224,106,719 150,337,697 

2015 Full Time 37,190 40 31,586 5,564 174,706,245 106,535,052 

2015 Part-time 9,173 14 7,142 2,017 19,867,847 9,135,266 

2015 Reduced Part-time 22,587 51 18,513 4,023 25,629,987 14,499,809 

 Total 68,950 105 57,241 11,604 220,204,078 130,170,126 
 Page | 118
 

FY 2018 Annual Management Report
 

Trust Enrollment Activity contd. 

Fiscal 

Year Type Members 

Enrolled 

Members 

Earning 

or Not 

Exited 

Earned 

Award 

Did Not 

Earn 

Amount 

Earned 

Amount 

Used 

2016 Full Time 35,517 161 29,666 5,690 165,221,790 79,867,810 

2016 Part-time 9,577 83 7,339 2,155 20,572,703 7,170,394 

2016 Reduced Part-time 25,078 281 20,699 4,098 28,274,014 13,674,315 

 Total 70,172 525 57,704 11,943 214,068,507 100,712,519 

2017 Full Time 34,100 2,609 25,992 5,499 145,188,894 39,033,756 

2017 Part-time 9,336 2,249 4,971 2,116 13,898,490 2,034,609 

2017 Reduced Part-time 24,455 4,064 17,265 3,126 23,449,036 6,176,737 

2017 Affiliate 0 0 0 0 0 0 

 Total 67,891 8,922 48,228 10,741 182,536,420 47,245,101 

2018 Full Time 27,394 25,875 485 1,034 2,722,267 468,775 

2018 Part-time 2,551 2,493 0 58 0 0 

2018 Reduced Part-time 7,676 5,857 1,663 156 2,066,815 460,199 

2018 Affiliate 0 0 0 0 0 0 

 Total 37,621 34,225 2,148 1,248 4,789,083 928,974 

Cumulative to Date 1,444,174 43,843 1,116,378 283,953 3,746,027,716 2,707,619,311 
2018 

CORORATION FOR NATIONAL AND COMMUNITY SERVICE 

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