U.S DEPARTMENT OF HEALTH AND HUMAN SERVICES Material Weakness ? Internal controls over compliance ? Reporting Finding 2022-001 ? ALN 93.558 Temporary Assistance for Needy Families (TANF) Criteria ? In accordance with 2 CFR Subpart F 200.508, the auditee must prepare appropriate financial statements, including the supplemental schedule of expenditures of federal awards (SEFA) in accordance with 200.510 of this regulation. The auditee must include the total federal awards expended for the same period covered by the auditee?s financial statements. Condition ? The SEFA prepared by the Organization and submitted for audit did not include the TANF program and the related expenses totaling $891,795. Effect ? The initial major program determination had to be revised once the auditor identified the missing expenditures, which also resulted in the identification of an additional major program for testing. Controls over compliance for reporting required for federal programs and preparation of the SEFA were not sufficient to detect that the program and related expenditures were missing on the 2022 SEFA. The error in preparing the SEFA and not including the TANF program on the schedule could have resulted in a major program not being properly identified and tested as required by the Uniform Guidance. This also resulted in delays in completing the audit. Cause ? The TANF funds were a new source of funding for the Organization and were received from a non federal pass-through entity. When preparing the SEFA, the funds were overlooked and not included on the SEFA submitted for audit. Controls over the preparation and review processes for the SEFA were not designed effectively to detect the missing program and expenditures. Recommendation ? We recommend that the Organization determine the source of funding prior to set up of the project in the general ledger. Similar to how other federal awards are identified in the general ledger, we recommend that all federal awards be labeled in the general ledger by the federal ALN upon initial set up. In addition, a secondary review should be performed at year-end to ensure the completeness of the SEFA and determine that all expenditures related to the federal programs in the general ledger are included in the SEFA prior to submission of the SEFA for audit. View of Responsible Officials ? See Management?s Corrective Action Plan.
U.S DEPARTMENT OF HEALTH AND HUMAN SERVICES Significant Deficiency ? Internal controls over compliance ? Eligibility Finding 2022-002 ? ALN 93.558 Temporary Assistance for Needy Families (TANF) Criteria ? The TANF grant sets specific income guidelines for eligibility and requires that all wages before taxes or deductions received in a month, including compensation for items such as back pay, bonuses, holiday, and vacation time, be included in gross wages for eligibility calculations. Condition ? The Organization did not include holiday pay or overtime pay in its calculation for gross wages in determining eligibility for at least 5 clients of the 40 clients tested. In addition, in one instance, an outdated check stub was used in the income determination, and, in one instance, only a two-week pay stub was used in the income determination. Controls over the review of income determinations were not operating sufficiently to detect that these errors had occurred prior to providing client assistance under the TANF program. Effect ? In all but one of the instances noted, it was later determined that the client was, in fact, income eligible for TANF services, and the expenditures related to this assistance were, in fact, allowable costs. However, in one instance, there was not sufficient information to make that determination. Based on the analysis of the error percentage and the total population of client service expenditures, this error did not result in questioned or likely questioned costs exceeding the reporting guidelines. Overall, the review control over the income calculations failed to identify the errors in a timely manner and could have resulted in some questioned costs. Cause ? The review process was not performed in an efficient and effective manner to determine that income calculations were not correct or not documented in the proper manner. Management has noted that these were oversights due to the volume of TANF transactions in 2022. Recommendation ? Procedures should be evaluated to ensure that client files are being reviewed for proper eligibility criteria, and a reperformance of all income calculations should be completed as a detective control ensuring that calculations result in eligible clients being served. View of Responsible Officials ? See Management?s Corrective Action Plan.
U.S DEPARTMENT OF HEALTH AND HUMAN SERVICES Material Weakness ? Internal controls over compliance ? Reporting Finding 2022-001 ? ALN 93.558 Temporary Assistance for Needy Families (TANF) Criteria ? In accordance with 2 CFR Subpart F 200.508, the auditee must prepare appropriate financial statements, including the supplemental schedule of expenditures of federal awards (SEFA) in accordance with 200.510 of this regulation. The auditee must include the total federal awards expended for the same period covered by the auditee?s financial statements. Condition ? The SEFA prepared by the Organization and submitted for audit did not include the TANF program and the related expenses totaling $891,795. Effect ? The initial major program determination had to be revised once the auditor identified the missing expenditures, which also resulted in the identification of an additional major program for testing. Controls over compliance for reporting required for federal programs and preparation of the SEFA were not sufficient to detect that the program and related expenditures were missing on the 2022 SEFA. The error in preparing the SEFA and not including the TANF program on the schedule could have resulted in a major program not being properly identified and tested as required by the Uniform Guidance. This also resulted in delays in completing the audit. Cause ? The TANF funds were a new source of funding for the Organization and were received from a non federal pass-through entity. When preparing the SEFA, the funds were overlooked and not included on the SEFA submitted for audit. Controls over the preparation and review processes for the SEFA were not designed effectively to detect the missing program and expenditures. Recommendation ? We recommend that the Organization determine the source of funding prior to set up of the project in the general ledger. Similar to how other federal awards are identified in the general ledger, we recommend that all federal awards be labeled in the general ledger by the federal ALN upon initial set up. In addition, a secondary review should be performed at year-end to ensure the completeness of the SEFA and determine that all expenditures related to the federal programs in the general ledger are included in the SEFA prior to submission of the SEFA for audit. View of Responsible Officials ? See Management?s Corrective Action Plan.
U.S DEPARTMENT OF HEALTH AND HUMAN SERVICES Significant Deficiency ? Internal controls over compliance ? Eligibility Finding 2022-002 ? ALN 93.558 Temporary Assistance for Needy Families (TANF) Criteria ? The TANF grant sets specific income guidelines for eligibility and requires that all wages before taxes or deductions received in a month, including compensation for items such as back pay, bonuses, holiday, and vacation time, be included in gross wages for eligibility calculations. Condition ? The Organization did not include holiday pay or overtime pay in its calculation for gross wages in determining eligibility for at least 5 clients of the 40 clients tested. In addition, in one instance, an outdated check stub was used in the income determination, and, in one instance, only a two-week pay stub was used in the income determination. Controls over the review of income determinations were not operating sufficiently to detect that these errors had occurred prior to providing client assistance under the TANF program. Effect ? In all but one of the instances noted, it was later determined that the client was, in fact, income eligible for TANF services, and the expenditures related to this assistance were, in fact, allowable costs. However, in one instance, there was not sufficient information to make that determination. Based on the analysis of the error percentage and the total population of client service expenditures, this error did not result in questioned or likely questioned costs exceeding the reporting guidelines. Overall, the review control over the income calculations failed to identify the errors in a timely manner and could have resulted in some questioned costs. Cause ? The review process was not performed in an efficient and effective manner to determine that income calculations were not correct or not documented in the proper manner. Management has noted that these were oversights due to the volume of TANF transactions in 2022. Recommendation ? Procedures should be evaluated to ensure that client files are being reviewed for proper eligibility criteria, and a reperformance of all income calculations should be completed as a detective control ensuring that calculations result in eligible clients being served. View of Responsible Officials ? See Management?s Corrective Action Plan.