2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-024 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Justice
Pass-Through Entity: None
AL Number and Title: 16.575 – Crime Victim Assistance
Federal Award Numbers: 2018-V2-GX-0066 (Year: 2018), 2019-V2-GX-0019 (Year: 2019), 2020-V2-GX-0014 (Year: 2020), 15POVC-21-GG-00619-ASSI (Year: 2021), 15POVC-22-GG-00691-ASSI (Year: 2022)
Questioned Costs: None Identified
Description:
The Criminal Justice Coordinating Council, an attached agency of the Georgia Bureau of Investigation, should improve internal controls over required financial, performance, and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately.
Background Information:
The Crime Victim Assistance (CVA) Program, created under the 1984 Victims of Crime Act, provides federal funding to support victim assistance and compensation programs, to provide training for diverse professionals who work with victims, to develop projects to enhance victims’ rights and services, and to undertake public education and awareness activities on behalf of crime victims.
The Georgia Criminal Justice Coordinating Council (CJCC) was designated as the custodian of the CVA funds for the State of Georgia. In that capacity, the CJCC was required to report details associated with CVA expenditures to the U.S. Department of Justice (USDOJ). This expenditure information is submitted through the JustGrants portal and is reflected on the quarterly SF-425 Federal Financial Report (FFR). In addition, the CJCC was required to report information relevant to the performance and activities of the CVA program to the USDOJ on the quarterly Performance Management Tool (PMT).
Lastly, Funds associated with the Crime Victim Assistance program are provided to the CJCC for allocation to eligible subrecipients. Because the CJCC subgrants program funds to various entities, the CJCC must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the CJCC is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In addition, the CJCC is required to report cumulative expenditures on a quarterly basis in accordance with the USDOJ Grants Financial Guide and provisions included in the Uniform Guidance, Section 200.328 – Financial Reporting, which state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Our audit of the CVA program revealed there was no evidence of internal controls over the FFR, PMT, and FFATA reporting requirements.
Additionally, a sample of four grants associated with the CVA program were randomly selected for testing using a non-statistical sampling method. This testing revealed that the cumulative expenses reported on the third quarter submission of the FFR for the FY2021 grant were overstated by $916,176.95. Subsequent submissions reflected the correct cumulative total.
Cause:
Though formal internal controls processes have been documented for the FFR reports, the controls were not implemented due in part to a lack of sufficient staffing at the agency. Additionally, control processes have not been documented for the PMT and FFATA reporting requirements.
Effect:
The deficiencies noted in the FFR reporting process resulted in noncompliance with federal regulations as required by the USDOJ. Overstated expenditures could impact the decision-making process at the federal level due to the FFR being used for general management of awards made under federal financial assistance programs. Furthermore, though it does not appear that inappropriate information was transmitted on the PMT or FFATA reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
The CJCC should review their current FFR control policy and make updates if needed. The CJCC should, then, implement and maintain documentation of the control noted in their policy. Additionally, the CJCC should design and implement controls over their PMT and FFATA reporting and ensure evidence of each control is maintained on-file.
Views of Responsible Officials:
CJCC concurs with the finding. The reports which contained errors were the result of insufficient staffing and capacity during the audit period, allowing insufficient time and capacity for review.
CJCC is compelled to reinforce however that no errors were noted in the PMT and FFATA reports, and that errors in FFR reports were submitted for correction, based upon the guidance of the US Department of Justice Office of Justice Programs. In regard to materiality, CJCC notes that these awards are appropriated as part of a multi-billion dollar program, on a formula basis that does not account for performance or quarterly spend. As such, temporary misstatements do not have any significant impact on federal reporting. It is additionally important to note, the federal systems in which these reports are submitted do not facilitate secondary reviewers or control processes without account sharing, which is expressly forbidden.
2023-025 Improve Controls over Manual Journal Entries
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.801 – Jobs for Veterans State Grant
Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13
(Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021)
Questioned Costs: $1,220,638
Description:
The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster.
Background Information:
The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities.
The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans.
Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.”
Condition:
Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program.
Questioned Costs:
Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153.
In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638.
Cause:
The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing.
Effect:
The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
2023-026 Improve Controls over Financial Reporting
Compliance Requirement: Reporting
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2021-037
Description:
The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA).
Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit.
The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records.
Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records.
Variances identified on each report are as follows:
Cause:
Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized.
Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report.
Effect:
The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program.
Recommendation:
We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements.
In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website.
Views of Responsible Officials:
GDOL concurs with this finding:
Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13:
• The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times).
• In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists.
• GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate.
• With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard.
• The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount.
Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed:
• The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system.
• Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued.
• The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG.
• Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG.
• In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023.
• Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
2023-026 Improve Controls over Financial Reporting
Compliance Requirement: Reporting
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2021-037
Description:
The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA).
Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit.
The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records.
Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records.
Variances identified on each report are as follows:
Cause:
Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized.
Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report.
Effect:
The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program.
Recommendation:
We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements.
In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website.
Views of Responsible Officials:
GDOL concurs with this finding:
Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13:
• The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times).
• In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists.
• GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate.
• With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard.
• The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount.
Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed:
• The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system.
• Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued.
• The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG.
• Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG.
• In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023.
• Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
2023-026 Improve Controls over Financial Reporting
Compliance Requirement: Reporting
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2021-037
Description:
The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA).
Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit.
The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records.
Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records.
Variances identified on each report are as follows:
Cause:
Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized.
Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report.
Effect:
The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program.
Recommendation:
We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements.
In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website.
Views of Responsible Officials:
GDOL concurs with this finding:
Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13:
• The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times).
• In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists.
• GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate.
• With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard.
• The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount.
Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed:
• The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system.
• Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued.
• The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG.
• Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG.
• In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023.
• Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
2023-027 Improve Controls over Administrative Expenditures
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI372182255A13 (Year: 2022), UI393172355A13 (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-027
Description:
The Georgia Department of Labor did not have a review and approval process in place for certain program expenditures.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. Grants of funds for the administration of State UC laws and public employment service programs are made to States under the Social Security Act, the Wagner-Peyser Act, and the Appropriations Acts. These administrative grant funds are received and managed by the Georgia Department of Labor (DOL) for the State of Georgia.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, provisions included in Title 20 CFR Section 601.6 provide that administrative grant funds should be used in “amounts necessary for the proper and efficient administration of the State unemployment compensation law and employment service program.”
Condition:
Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 47 out of 5,863 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that six expenditure transactions related to utility bills did not reflect evidence of management review and approval.
During testing, we noted that the six transactions found to be exceptions were all prior to the date that DOL had indicated that they had addressed this issue as noted in the prior year finding corrective action plan. No further exceptions were noted after the prior year finding corrective action plan was designed and implemented.
Cause:
Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL’s failure to follow their internal control policy and the initiation of payments without appropriate review and approval.
Effect:
The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
It should be noted that based on testing it appears that the corrective action plan that was submitted for the prior year finding was effective in dealing with this issue as no additional exceptions were identified in our testing of items that were recorded after the date of the corrective action being put into place.
Views of Responsible Officials:
We concur with this finding:
As noted by DOAA in finding 2023-027, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place.
GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
2023-027 Improve Controls over Administrative Expenditures
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI372182255A13 (Year: 2022), UI393172355A13 (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-027
Description:
The Georgia Department of Labor did not have a review and approval process in place for certain program expenditures.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. Grants of funds for the administration of State UC laws and public employment service programs are made to States under the Social Security Act, the Wagner-Peyser Act, and the Appropriations Acts. These administrative grant funds are received and managed by the Georgia Department of Labor (DOL) for the State of Georgia.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, provisions included in Title 20 CFR Section 601.6 provide that administrative grant funds should be used in “amounts necessary for the proper and efficient administration of the State unemployment compensation law and employment service program.”
Condition:
Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 47 out of 5,863 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that six expenditure transactions related to utility bills did not reflect evidence of management review and approval.
During testing, we noted that the six transactions found to be exceptions were all prior to the date that DOL had indicated that they had addressed this issue as noted in the prior year finding corrective action plan. No further exceptions were noted after the prior year finding corrective action plan was designed and implemented.
Cause:
Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL’s failure to follow their internal control policy and the initiation of payments without appropriate review and approval.
Effect:
The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
It should be noted that based on testing it appears that the corrective action plan that was submitted for the prior year finding was effective in dealing with this issue as no additional exceptions were identified in our testing of items that were recorded after the date of the corrective action being put into place.
Views of Responsible Officials:
We concur with this finding:
As noted by DOAA in finding 2023-027, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place.
GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
2023-028 Improve Controls over Eligibility Determinations
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: $310,939
Repeat of Prior Year Finding: 2022-028, 2021-035
Description:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states: “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs.
Condition:
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 12 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $310,939:
• Claimants did not self-certify for benefits in eighteen instances.
• Fraudulent employer-filed claims were filed for thirteen claimants.
• Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
Questioned Costs:
Upon testing a sample of $15,331 in UI program payments, known questioned costs of $1,784 were identified. Using the population of UI payments sampled, which totaled $319,332,841, we project likely questioned costs to be approximately $90,884,173.
In addition, known questioned costs were also identified as noted below:
• $1,893 for improper payments associated with individually significant benefit payments tested; and
• $206,783 for improper FPUC and PEUC payment amounts associated with the sample of benefit payments selected for testing.
Upon testing a sample of $3,374 in UI COVID related program payments, known questioned costs of $2,295 were identified. Using the population of UI payments sampled, which totaled $57,392,113, we project likely questioned costs to be approximately $30,157,208.
In addition, known questioned costs were also identified as noted below:
• $658 for improper payments associated with individually significant benefit payments tested;
• $97,526 for improper FPUC, PUA, and UI payment amounts associated with the sample of benefit payments selected for testing.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed.
In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner.
Effect:
Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf.
Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant’s weekly benefit amount. Also, analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed.
Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
1) Claimants did not self-certify for benefits in eighteen instances
GDOL Response:
Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded.
Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work.
We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized UI system is implemented in 2026.
2) Fraudulent employer-filed claims were filed for thirteen claimants
GDOL Response:
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers:
Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified.
GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution.
3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
GDOL Response:
The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under CAA/ARPA.
GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period.
Summary:
GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-028 Improve Controls over Eligibility Determinations
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: $310,939
Repeat of Prior Year Finding: 2022-028, 2021-035
Description:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states: “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs.
Condition:
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 12 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $310,939:
• Claimants did not self-certify for benefits in eighteen instances.
• Fraudulent employer-filed claims were filed for thirteen claimants.
• Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
Questioned Costs:
Upon testing a sample of $15,331 in UI program payments, known questioned costs of $1,784 were identified. Using the population of UI payments sampled, which totaled $319,332,841, we project likely questioned costs to be approximately $90,884,173.
In addition, known questioned costs were also identified as noted below:
• $1,893 for improper payments associated with individually significant benefit payments tested; and
• $206,783 for improper FPUC and PEUC payment amounts associated with the sample of benefit payments selected for testing.
Upon testing a sample of $3,374 in UI COVID related program payments, known questioned costs of $2,295 were identified. Using the population of UI payments sampled, which totaled $57,392,113, we project likely questioned costs to be approximately $30,157,208.
In addition, known questioned costs were also identified as noted below:
• $658 for improper payments associated with individually significant benefit payments tested;
• $97,526 for improper FPUC, PUA, and UI payment amounts associated with the sample of benefit payments selected for testing.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed.
In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner.
Effect:
Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf.
Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant’s weekly benefit amount. Also, analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed.
Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
1) Claimants did not self-certify for benefits in eighteen instances
GDOL Response:
Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded.
Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work.
We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized UI system is implemented in 2026.
2) Fraudulent employer-filed claims were filed for thirteen claimants
GDOL Response:
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers:
Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified.
GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution.
3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
GDOL Response:
The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under CAA/ARPA.
GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period.
Summary:
GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-029 Improve Controls over Employer-Filed Claims
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: Unknown
Repeat of Prior Year Findings: 2022-032
Description:
The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the former Georgia Department of Labor (DOL) Commissioner Mark Butler enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency.
To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Condition:
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim.
In addition, when completed procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for thirteen claimants and nine employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid out for all weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then reviewed the listing of benefit payments made during the fiscal year and determined $15,207,785 in benefits were paid out to 940 claimants by the nine employers initially identified as having Employer-Filed Claim Fraud Stops. It was noted that in one instance, a fraudulent employer submitted claims on 47 different days for 287 claimants for a total of $4,720,252. In one submission alone, on August 31, 2022, the fraudulent employer submitted 62 weekending dates going back to January 4, 2020 for 29 claimants totaling $138,738. In this case the GDOL did not identify the employer as fraudulent until November 7, 2022.
While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 1,828 employers that were for 33,704 individual claimants:
• Regular Unemployment Compensation (UC) - $38,201,885
• State Extended Benefits (SEB) - $7,947
• Reemployment Trade Adjustment Assistance (RTAA) - $5,712
• Federal Pandemic Unemployment Compensation (FPUC) - $12,557,907
• Pandemic Emergency Unemployment Compensation (PEUC) - $3,146,268
• Mixed Earner Unemployment Compensation (MEUC) - $200
Questioned Costs:
Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed
Effect:
These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA).
Recommendation:
We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims.
GDOL Response:
GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system:
The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic.
EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer.
Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs.
By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees.
Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work.
Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases.
Effective June 29, 2023 GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
Summary:
This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
2023-029 Improve Controls over Employer-Filed Claims
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: Unknown
Repeat of Prior Year Findings: 2022-032
Description:
The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the former Georgia Department of Labor (DOL) Commissioner Mark Butler enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency.
To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Condition:
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim.
In addition, when completed procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for thirteen claimants and nine employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid out for all weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then reviewed the listing of benefit payments made during the fiscal year and determined $15,207,785 in benefits were paid out to 940 claimants by the nine employers initially identified as having Employer-Filed Claim Fraud Stops. It was noted that in one instance, a fraudulent employer submitted claims on 47 different days for 287 claimants for a total of $4,720,252. In one submission alone, on August 31, 2022, the fraudulent employer submitted 62 weekending dates going back to January 4, 2020 for 29 claimants totaling $138,738. In this case the GDOL did not identify the employer as fraudulent until November 7, 2022.
While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 1,828 employers that were for 33,704 individual claimants:
• Regular Unemployment Compensation (UC) - $38,201,885
• State Extended Benefits (SEB) - $7,947
• Reemployment Trade Adjustment Assistance (RTAA) - $5,712
• Federal Pandemic Unemployment Compensation (FPUC) - $12,557,907
• Pandemic Emergency Unemployment Compensation (PEUC) - $3,146,268
• Mixed Earner Unemployment Compensation (MEUC) - $200
Questioned Costs:
Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed
Effect:
These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA).
Recommendation:
We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims.
GDOL Response:
GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system:
The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic.
EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer.
Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs.
By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees.
Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work.
Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases.
Effective June 29, 2023 GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
Summary:
This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
2023-030 Improve Controls over the Identification, Recording, and Reporting of Overpayments
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023), EUISSA2055A13 (Year:2020)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-029, 2021-038, 2020-038
Description:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL.
Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable date on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities.
Condition:
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were a few quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter’s benefits have been paid. However, the crossmatches for third quarter of 2022, which includes the months of July 2022 to September 2022, were not completed until May 19, 2023, and crossmatches for fourth quarter of 2023, which includes the months of October 2022 to December 2022, were not completed until July 14, 2023. It is also our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed.
Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements to be provided by August 18, 2023. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases on October 5, 2023, auditors could not summarize the data to match amounts reported on the financial statements. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation.
While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding, review controls and processes, and follow-up on the prior year finding. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL.
Cause:
The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office.
Effect:
Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2023 will not be identified and investigated until the latter half of fiscal year 2024. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program.
Recommendation:
The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports.
We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
GDOL Response:
GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports.
Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding.
The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties.
GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024.
Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system.
Summary:
The current unemployment system is obsolete and cannot be remediated at this time. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-030 Improve Controls over the Identification, Recording, and Reporting of Overpayments
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023), EUISSA2055A13 (Year:2020)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-029, 2021-038, 2020-038
Description:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL.
Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable date on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities.
Condition:
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were a few quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter’s benefits have been paid. However, the crossmatches for third quarter of 2022, which includes the months of July 2022 to September 2022, were not completed until May 19, 2023, and crossmatches for fourth quarter of 2023, which includes the months of October 2022 to December 2022, were not completed until July 14, 2023. It is also our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed.
Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements to be provided by August 18, 2023. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases on October 5, 2023, auditors could not summarize the data to match amounts reported on the financial statements. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation.
While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding, review controls and processes, and follow-up on the prior year finding. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL.
Cause:
The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office.
Effect:
Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2023 will not be identified and investigated until the latter half of fiscal year 2024. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program.
Recommendation:
The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports.
We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
GDOL Response:
GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports.
Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding.
The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties.
GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024.
Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system.
Summary:
The current unemployment system is obsolete and cannot be remediated at this time. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-025 Improve Controls over Manual Journal Entries
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.801 – Jobs for Veterans State Grant
Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13
(Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021)
Questioned Costs: $1,220,638
Description:
The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster.
Background Information:
The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities.
The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans.
Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.”
Condition:
Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program.
Questioned Costs:
Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153.
In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638.
Cause:
The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing.
Effect:
The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
2023-031 Strengthen Controls over Review of Certified Payrolls
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: None
Federal Awarding Agency: U.S. Department of Transportation
Pass-Through Entity: None
AL Numbers and Titles: 20.205 – Highway Planning and Construction
20.205 - COVID-19 – Highway Planning and
Construction
Federal Award Numbers: Various – See Table 2023-031
Questioned Costs: None Identified
Description:
The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented.
Background Information:
The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads.
The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed.
The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations.
Criteria:
As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Condition:
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager.
Cause:
The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures.
Effect:
Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates.
Recommendation:
We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews.
Views of Responsible Officials:
We concur with this finding.
2023-031 Strengthen Controls over Review of Certified Payrolls
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: None
Federal Awarding Agency: U.S. Department of Transportation
Pass-Through Entity: None
AL Numbers and Titles: 20.205 – Highway Planning and Construction
20.205 - COVID-19 – Highway Planning and
Construction
Federal Award Numbers: Various – See Table 2023-031
Questioned Costs: None Identified
Description:
The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented.
Background Information:
The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads.
The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed.
The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations.
Criteria:
As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Condition:
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager.
Cause:
The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures.
Effect:
Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates.
Recommendation:
We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews.
Views of Responsible Officials:
We concur with this finding.
2023-031 Strengthen Controls over Review of Certified Payrolls
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: None
Federal Awarding Agency: U.S. Department of Transportation
Pass-Through Entity: None
AL Numbers and Titles: 20.205 – Highway Planning and Construction
20.205 - COVID-19 – Highway Planning and
Construction
Federal Award Numbers: Various – See Table 2023-031
Questioned Costs: None Identified
Description:
The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented.
Background Information:
The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads.
The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed.
The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations.
Criteria:
As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Condition:
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager.
Cause:
The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures.
Effect:
Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates.
Recommendation:
We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews.
Views of Responsible Officials:
We concur with this finding.
2023-032 Improve Controls over Procurement Competitive Bidding
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of the Treasury
Pass-Through Entity: None
AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local
Fiscal Recovery Funds
Federal Award Number: SLFRP1029 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately.
Background Information:
The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, including by providing assistance to
households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ;
2. Respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the recipient that perform
essential work or by providing grants to eligible employers that have eligible workers
who are performing essential work;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency; and
4. Make necessary investments in water, sewer, or broadband infrastructure.
In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS).
Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities.
Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form.
Condition:
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required.
DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process.
Cause:
Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts.
Effect:
Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual.
In addition, DHS could enter into contracts that are not the most advantageous to the State.
Recommendation:
The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-032 Improve Controls over Procurement Competitive Bidding
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of the Treasury
Pass-Through Entity: None
AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local
Fiscal Recovery Funds
Federal Award Number: SLFRP1029 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately.
Background Information:
The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, including by providing assistance to
households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ;
2. Respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the recipient that perform
essential work or by providing grants to eligible employers that have eligible workers
who are performing essential work;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency; and
4. Make necessary investments in water, sewer, or broadband infrastructure.
In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS).
Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities.
Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form.
Condition:
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required.
DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process.
Cause:
Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts.
Effect:
Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual.
In addition, DHS could enter into contracts that are not the most advantageous to the State.
Recommendation:
The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-032 Improve Controls over Procurement Competitive Bidding
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of the Treasury
Pass-Through Entity: None
AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local
Fiscal Recovery Funds
Federal Award Number: SLFRP1029 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately.
Background Information:
The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, including by providing assistance to
households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ;
2. Respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the recipient that perform
essential work or by providing grants to eligible employers that have eligible workers
who are performing essential work;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency; and
4. Make necessary investments in water, sewer, or broadband infrastructure.
In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS).
Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities.
Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form.
Condition:
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required.
DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process.
Cause:
Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts.
Effect:
Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual.
In addition, DHS could enter into contracts that are not the most advantageous to the State.
Recommendation:
The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-017
Description:
The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review.
Cause:
In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs.
Effect:
Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members.
Views of Responsible Officials:
We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-017
Description:
The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review.
Cause:
In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs.
Effect:
Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members.
Views of Responsible Officials:
We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-017
Description:
The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review.
Cause:
In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs.
Effect:
Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members.
Views of Responsible Officials:
We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: $42,411
Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023
Description:
The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…”
Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable.
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members.
Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective.
We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage.
Questioned Costs:
Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively.
Cause:
The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency.
Effect:
Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments.
The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid.
Views of Responsible Officials:
We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: $42,411
Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023
Description:
The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…”
Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable.
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members.
Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective.
We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage.
Questioned Costs:
Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively.
Cause:
The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency.
Effect:
Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments.
The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid.
Views of Responsible Officials:
We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: $42,411
Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023
Description:
The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…”
Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable.
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members.
Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective.
We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage.
Questioned Costs:
Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively.
Cause:
The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency.
Effect:
Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments.
The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid.
Views of Responsible Officials:
We concur with this finding.
2023-018 Continue to Strengthen Application Risk Management Program
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044
Description:
The Department of Community Health should continue to strengthen controls over its application risk management program.
Background Information:
See Financial Finding at 2023-003.
Criteria:
See Financial Finding at 2023-003.
Condition:
See Financial Finding at 2023-003.
Cause:
See Financial Finding at 2023-003.
Effect:
See Financial Finding at 2023-003.
Recommendation:
See Financial Finding at 2023-003.
Views of Responsible Officials:
DCH agrees with the finding.
2023-018 Continue to Strengthen Application Risk Management Program
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044
Description:
The Department of Community Health should continue to strengthen controls over its application risk management program.
Background Information:
See Financial Finding at 2023-003.
Criteria:
See Financial Finding at 2023-003.
Condition:
See Financial Finding at 2023-003.
Cause:
See Financial Finding at 2023-003.
Effect:
See Financial Finding at 2023-003.
Recommendation:
See Financial Finding at 2023-003.
Views of Responsible Officials:
DCH agrees with the finding.
2023-018 Continue to Strengthen Application Risk Management Program
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044
Description:
The Department of Community Health should continue to strengthen controls over its application risk management program.
Background Information:
See Financial Finding at 2023-003.
Criteria:
See Financial Finding at 2023-003.
Condition:
See Financial Finding at 2023-003.
Cause:
See Financial Finding at 2023-003.
Effect:
See Financial Finding at 2023-003.
Recommendation:
See Financial Finding at 2023-003.
Views of Responsible Officials:
DCH agrees with the finding.
2023-019 Strengthen Controls over NCCI Program Requirements
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-019
Description:
The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties.
Condition:
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services.
Cause:
The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end.
Effect:
The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services.
Views of Responsible Officials:
We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-019
Description:
The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties.
Condition:
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services.
Cause:
The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end.
Effect:
The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services.
Views of Responsible Officials:
We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-019
Description:
The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties.
Condition:
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services.
Cause:
The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end.
Effect:
The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services.
Views of Responsible Officials:
We concur with this finding.
2023-021 Improve Controls over Period of Performance
Compliance Requirement: Period of Performance
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Number and Title: 93.958 – Block Grants for Community Mental Health
Federal Award Number: B09SM083833 (Year: 2021)
Questioned Costs: $1,996,195.46
Repeat of Prior Year Finding: 2022-024
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period.
Background Information:
The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
Funds associated with the MHBG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and
liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…”
Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.”
Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions.
Condition:
Our audit of the MHBG program included a review of adjustments with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. Two adjustments were identified as the population, and both were selected for testing. It was noted that both of these transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these adjustments were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy.
Questioned Costs:
Known questioned costs of $1,996,195.46 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award.
Effect:
The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting.
Recommendation:
We recommend that the DBHDD:
• Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner.
• Follow currently established grant close-out processes and procedures associated with period of performance requirements.
• Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-022 Improve Controls over Period of Performance
Compliance Requirement: Period of Performance
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Number and Title: 93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
Federal Award Numbers: B08TI085799 (Year: 2023), 1B08TI083442-01 (Year: 2021)
Questioned Costs: $221,131.74
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period.
Background Information:
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and
liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…”
Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.”
Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions.
Condition:
Our audit of the SABG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. Six expenditures were identified as the population and were all selected for testing. It was noted that three expenditures reviewed were incurred before the period of performance.
In addition, our audit of the SABG program included a review of adjustments with a performance period ending date during the audit period. One adjustment was identified as the population and tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that this transaction was not posted within 90 days of the end of the period of performance as required. Additionally, this expenditure was not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy.
Questioned Costs:
Known questioned costs of $221,131.74 related to the SABG program were identified for expenditures that were incurred before the period of performance or paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award.
Effect:
The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting.
Recommendation:
We recommend that the DBHDD:
• Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner.
• Follow currently established grant close-out processes and procedures associated with period of performance requirements.
• Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-013 Improve Controls over Subrecipient Monitoring
Compliance Requirement: Subrecipient Monitoring
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program (Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs)
10.569 – Emergency Food Assistance Program (Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…”
Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.”
Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested.
• Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients.
• As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews.
Effect:
The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed;
• Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-014 Improve Controls over Physical Inventory of Food Items
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program
10.568 – Emergency Food Assistance Program
(Administrative Costs)
10.568 – COVID-19 – Emergency Food Assistance
Program (Administrative Costs)
10.569 – Emergency Food Assistance Program
(Food Commodities)
Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022)
Questioned Costs: None Identified
Description:
The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately.
Background Information:
The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons.
USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.”
Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...”
Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.”
Condition:
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies:
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested.
• Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested.
Cause:
Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories.
Effect:
The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated.
Recommendation:
We recommend that the DHS:
• Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and
• Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-012 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Agriculture
Pass-Through Entity: None
AL Numbers and Titles: 10.553 – School Breakfast Program
10.555 – Nutritional School Lunch Program
10.556 – Special Milk Program for Children
10.582 – Fresh Fruit and Vegetable Program
Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program.
Recommendation:
We recommend that the GaDOE:
• Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
We concur with this finding.
2023-024 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Justice
Pass-Through Entity: None
AL Number and Title: 16.575 – Crime Victim Assistance
Federal Award Numbers: 2018-V2-GX-0066 (Year: 2018), 2019-V2-GX-0019 (Year: 2019), 2020-V2-GX-0014 (Year: 2020), 15POVC-21-GG-00619-ASSI (Year: 2021), 15POVC-22-GG-00691-ASSI (Year: 2022)
Questioned Costs: None Identified
Description:
The Criminal Justice Coordinating Council, an attached agency of the Georgia Bureau of Investigation, should improve internal controls over required financial, performance, and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately.
Background Information:
The Crime Victim Assistance (CVA) Program, created under the 1984 Victims of Crime Act, provides federal funding to support victim assistance and compensation programs, to provide training for diverse professionals who work with victims, to develop projects to enhance victims’ rights and services, and to undertake public education and awareness activities on behalf of crime victims.
The Georgia Criminal Justice Coordinating Council (CJCC) was designated as the custodian of the CVA funds for the State of Georgia. In that capacity, the CJCC was required to report details associated with CVA expenditures to the U.S. Department of Justice (USDOJ). This expenditure information is submitted through the JustGrants portal and is reflected on the quarterly SF-425 Federal Financial Report (FFR). In addition, the CJCC was required to report information relevant to the performance and activities of the CVA program to the USDOJ on the quarterly Performance Management Tool (PMT).
Lastly, Funds associated with the Crime Victim Assistance program are provided to the CJCC for allocation to eligible subrecipients. Because the CJCC subgrants program funds to various entities, the CJCC must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent.
Criteria:
As a recipient of federal awards, the CJCC is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In addition, the CJCC is required to report cumulative expenditures on a quarterly basis in accordance with the USDOJ Grants Financial Guide and provisions included in the Uniform Guidance, Section 200.328 – Financial Reporting, which state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Our audit of the CVA program revealed there was no evidence of internal controls over the FFR, PMT, and FFATA reporting requirements.
Additionally, a sample of four grants associated with the CVA program were randomly selected for testing using a non-statistical sampling method. This testing revealed that the cumulative expenses reported on the third quarter submission of the FFR for the FY2021 grant were overstated by $916,176.95. Subsequent submissions reflected the correct cumulative total.
Cause:
Though formal internal controls processes have been documented for the FFR reports, the controls were not implemented due in part to a lack of sufficient staffing at the agency. Additionally, control processes have not been documented for the PMT and FFATA reporting requirements.
Effect:
The deficiencies noted in the FFR reporting process resulted in noncompliance with federal regulations as required by the USDOJ. Overstated expenditures could impact the decision-making process at the federal level due to the FFR being used for general management of awards made under federal financial assistance programs. Furthermore, though it does not appear that inappropriate information was transmitted on the PMT or FFATA reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
The CJCC should review their current FFR control policy and make updates if needed. The CJCC should, then, implement and maintain documentation of the control noted in their policy. Additionally, the CJCC should design and implement controls over their PMT and FFATA reporting and ensure evidence of each control is maintained on-file.
Views of Responsible Officials:
CJCC concurs with the finding. The reports which contained errors were the result of insufficient staffing and capacity during the audit period, allowing insufficient time and capacity for review.
CJCC is compelled to reinforce however that no errors were noted in the PMT and FFATA reports, and that errors in FFR reports were submitted for correction, based upon the guidance of the US Department of Justice Office of Justice Programs. In regard to materiality, CJCC notes that these awards are appropriated as part of a multi-billion dollar program, on a formula basis that does not account for performance or quarterly spend. As such, temporary misstatements do not have any significant impact on federal reporting. It is additionally important to note, the federal systems in which these reports are submitted do not facilitate secondary reviewers or control processes without account sharing, which is expressly forbidden.
2023-025 Improve Controls over Manual Journal Entries
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.801 – Jobs for Veterans State Grant
Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13
(Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021)
Questioned Costs: $1,220,638
Description:
The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster.
Background Information:
The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities.
The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans.
Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.”
Condition:
Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program.
Questioned Costs:
Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153.
In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638.
Cause:
The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing.
Effect:
The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
2023-026 Improve Controls over Financial Reporting
Compliance Requirement: Reporting
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2021-037
Description:
The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA).
Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit.
The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records.
Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records.
Variances identified on each report are as follows:
Cause:
Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized.
Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report.
Effect:
The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program.
Recommendation:
We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements.
In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website.
Views of Responsible Officials:
GDOL concurs with this finding:
Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13:
• The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times).
• In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists.
• GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate.
• With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard.
• The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount.
Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed:
• The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system.
• Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued.
• The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG.
• Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG.
• In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023.
• Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
2023-026 Improve Controls over Financial Reporting
Compliance Requirement: Reporting
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2021-037
Description:
The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA).
Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit.
The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records.
Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records.
Variances identified on each report are as follows:
Cause:
Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized.
Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report.
Effect:
The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program.
Recommendation:
We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements.
In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website.
Views of Responsible Officials:
GDOL concurs with this finding:
Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13:
• The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times).
• In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists.
• GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate.
• With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard.
• The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount.
Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed:
• The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system.
• Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued.
• The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG.
• Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG.
• In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023.
• Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
2023-026 Improve Controls over Financial Reporting
Compliance Requirement: Reporting
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2021-037
Description:
The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA).
Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit.
The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.”
Condition:
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records.
Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records.
Variances identified on each report are as follows:
Cause:
Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized.
Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report.
Effect:
The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program.
Recommendation:
We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements.
In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website.
Views of Responsible Officials:
GDOL concurs with this finding:
Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13:
• The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times).
• In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists.
• GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate.
• With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard.
• The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount.
Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed:
• The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system.
• Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued.
• The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG.
• Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG.
• In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023.
• Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
2023-027 Improve Controls over Administrative Expenditures
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI372182255A13 (Year: 2022), UI393172355A13 (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-027
Description:
The Georgia Department of Labor did not have a review and approval process in place for certain program expenditures.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. Grants of funds for the administration of State UC laws and public employment service programs are made to States under the Social Security Act, the Wagner-Peyser Act, and the Appropriations Acts. These administrative grant funds are received and managed by the Georgia Department of Labor (DOL) for the State of Georgia.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, provisions included in Title 20 CFR Section 601.6 provide that administrative grant funds should be used in “amounts necessary for the proper and efficient administration of the State unemployment compensation law and employment service program.”
Condition:
Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 47 out of 5,863 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that six expenditure transactions related to utility bills did not reflect evidence of management review and approval.
During testing, we noted that the six transactions found to be exceptions were all prior to the date that DOL had indicated that they had addressed this issue as noted in the prior year finding corrective action plan. No further exceptions were noted after the prior year finding corrective action plan was designed and implemented.
Cause:
Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL’s failure to follow their internal control policy and the initiation of payments without appropriate review and approval.
Effect:
The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
It should be noted that based on testing it appears that the corrective action plan that was submitted for the prior year finding was effective in dealing with this issue as no additional exceptions were identified in our testing of items that were recorded after the date of the corrective action being put into place.
Views of Responsible Officials:
We concur with this finding:
As noted by DOAA in finding 2023-027, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place.
GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
2023-027 Improve Controls over Administrative Expenditures
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI372182255A13 (Year: 2022), UI393172355A13 (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-027
Description:
The Georgia Department of Labor did not have a review and approval process in place for certain program expenditures.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. Grants of funds for the administration of State UC laws and public employment service programs are made to States under the Social Security Act, the Wagner-Peyser Act, and the Appropriations Acts. These administrative grant funds are received and managed by the Georgia Department of Labor (DOL) for the State of Georgia.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, provisions included in Title 20 CFR Section 601.6 provide that administrative grant funds should be used in “amounts necessary for the proper and efficient administration of the State unemployment compensation law and employment service program.”
Condition:
Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 47 out of 5,863 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that six expenditure transactions related to utility bills did not reflect evidence of management review and approval.
During testing, we noted that the six transactions found to be exceptions were all prior to the date that DOL had indicated that they had addressed this issue as noted in the prior year finding corrective action plan. No further exceptions were noted after the prior year finding corrective action plan was designed and implemented.
Cause:
Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL’s failure to follow their internal control policy and the initiation of payments without appropriate review and approval.
Effect:
The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
It should be noted that based on testing it appears that the corrective action plan that was submitted for the prior year finding was effective in dealing with this issue as no additional exceptions were identified in our testing of items that were recorded after the date of the corrective action being put into place.
Views of Responsible Officials:
We concur with this finding:
As noted by DOAA in finding 2023-027, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place.
GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
2023-028 Improve Controls over Eligibility Determinations
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: $310,939
Repeat of Prior Year Finding: 2022-028, 2021-035
Description:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states: “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs.
Condition:
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 12 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $310,939:
• Claimants did not self-certify for benefits in eighteen instances.
• Fraudulent employer-filed claims were filed for thirteen claimants.
• Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
Questioned Costs:
Upon testing a sample of $15,331 in UI program payments, known questioned costs of $1,784 were identified. Using the population of UI payments sampled, which totaled $319,332,841, we project likely questioned costs to be approximately $90,884,173.
In addition, known questioned costs were also identified as noted below:
• $1,893 for improper payments associated with individually significant benefit payments tested; and
• $206,783 for improper FPUC and PEUC payment amounts associated with the sample of benefit payments selected for testing.
Upon testing a sample of $3,374 in UI COVID related program payments, known questioned costs of $2,295 were identified. Using the population of UI payments sampled, which totaled $57,392,113, we project likely questioned costs to be approximately $30,157,208.
In addition, known questioned costs were also identified as noted below:
• $658 for improper payments associated with individually significant benefit payments tested;
• $97,526 for improper FPUC, PUA, and UI payment amounts associated with the sample of benefit payments selected for testing.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed.
In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner.
Effect:
Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf.
Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant’s weekly benefit amount. Also, analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed.
Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
1) Claimants did not self-certify for benefits in eighteen instances
GDOL Response:
Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded.
Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work.
We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized UI system is implemented in 2026.
2) Fraudulent employer-filed claims were filed for thirteen claimants
GDOL Response:
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers:
Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified.
GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution.
3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
GDOL Response:
The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under CAA/ARPA.
GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period.
Summary:
GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-028 Improve Controls over Eligibility Determinations
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: $310,939
Repeat of Prior Year Finding: 2022-028, 2021-035
Description:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states: “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs.
Condition:
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 12 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $310,939:
• Claimants did not self-certify for benefits in eighteen instances.
• Fraudulent employer-filed claims were filed for thirteen claimants.
• Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
Questioned Costs:
Upon testing a sample of $15,331 in UI program payments, known questioned costs of $1,784 were identified. Using the population of UI payments sampled, which totaled $319,332,841, we project likely questioned costs to be approximately $90,884,173.
In addition, known questioned costs were also identified as noted below:
• $1,893 for improper payments associated with individually significant benefit payments tested; and
• $206,783 for improper FPUC and PEUC payment amounts associated with the sample of benefit payments selected for testing.
Upon testing a sample of $3,374 in UI COVID related program payments, known questioned costs of $2,295 were identified. Using the population of UI payments sampled, which totaled $57,392,113, we project likely questioned costs to be approximately $30,157,208.
In addition, known questioned costs were also identified as noted below:
• $658 for improper payments associated with individually significant benefit payments tested;
• $97,526 for improper FPUC, PUA, and UI payment amounts associated with the sample of benefit payments selected for testing.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed.
In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner.
Effect:
Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf.
Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant’s weekly benefit amount. Also, analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed.
Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants.
1) Claimants did not self-certify for benefits in eighteen instances
GDOL Response:
Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded.
Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work.
We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized UI system is implemented in 2026.
2) Fraudulent employer-filed claims were filed for thirteen claimants
GDOL Response:
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers:
Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified.
GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution.
3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia.
GDOL Response:
The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under CAA/ARPA.
GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period.
Summary:
GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-029 Improve Controls over Employer-Filed Claims
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: Unknown
Repeat of Prior Year Findings: 2022-032
Description:
The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the former Georgia Department of Labor (DOL) Commissioner Mark Butler enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency.
To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Condition:
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim.
In addition, when completed procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for thirteen claimants and nine employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid out for all weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then reviewed the listing of benefit payments made during the fiscal year and determined $15,207,785 in benefits were paid out to 940 claimants by the nine employers initially identified as having Employer-Filed Claim Fraud Stops. It was noted that in one instance, a fraudulent employer submitted claims on 47 different days for 287 claimants for a total of $4,720,252. In one submission alone, on August 31, 2022, the fraudulent employer submitted 62 weekending dates going back to January 4, 2020 for 29 claimants totaling $138,738. In this case the GDOL did not identify the employer as fraudulent until November 7, 2022.
While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 1,828 employers that were for 33,704 individual claimants:
• Regular Unemployment Compensation (UC) - $38,201,885
• State Extended Benefits (SEB) - $7,947
• Reemployment Trade Adjustment Assistance (RTAA) - $5,712
• Federal Pandemic Unemployment Compensation (FPUC) - $12,557,907
• Pandemic Emergency Unemployment Compensation (PEUC) - $3,146,268
• Mixed Earner Unemployment Compensation (MEUC) - $200
Questioned Costs:
Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed
Effect:
These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA).
Recommendation:
We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims.
GDOL Response:
GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system:
The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic.
EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer.
Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs.
By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees.
Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work.
Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases.
Effective June 29, 2023 GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
Summary:
This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
2023-029 Improve Controls over Employer-Filed Claims
Compliance Requirement: Eligibility
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023)
Questioned Costs: Unknown
Repeat of Prior Year Findings: 2022-032
Description:
The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the former Georgia Department of Labor (DOL) Commissioner Mark Butler enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency.
To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 - Improper Payments states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.”
Condition:
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim.
In addition, when completed procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for thirteen claimants and nine employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid out for all weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then reviewed the listing of benefit payments made during the fiscal year and determined $15,207,785 in benefits were paid out to 940 claimants by the nine employers initially identified as having Employer-Filed Claim Fraud Stops. It was noted that in one instance, a fraudulent employer submitted claims on 47 different days for 287 claimants for a total of $4,720,252. In one submission alone, on August 31, 2022, the fraudulent employer submitted 62 weekending dates going back to January 4, 2020 for 29 claimants totaling $138,738. In this case the GDOL did not identify the employer as fraudulent until November 7, 2022.
While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 1,828 employers that were for 33,704 individual claimants:
• Regular Unemployment Compensation (UC) - $38,201,885
• State Extended Benefits (SEB) - $7,947
• Reemployment Trade Adjustment Assistance (RTAA) - $5,712
• Federal Pandemic Unemployment Compensation (FPUC) - $12,557,907
• Pandemic Emergency Unemployment Compensation (PEUC) - $3,146,268
• Mixed Earner Unemployment Compensation (MEUC) - $200
Questioned Costs:
Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19.
Cause:
The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed
Effect:
These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA).
Recommendation:
We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims.
GDOL Response:
GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system:
The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic.
EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer.
Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs.
By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees.
Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work.
Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification.
Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf.
When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases.
Effective June 29, 2023 GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees:
• Employer accounts must have been registered with GDOL for more than 5 years.
• Employers must be current on all quarterly tax and wage reports.
• Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest.
• The week ending date on employer filed claims cannot be older than 30 days.
The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims.
Summary:
This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
2023-030 Improve Controls over the Identification, Recording, and Reporting of Overpayments
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023), EUISSA2055A13 (Year:2020)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-029, 2021-038, 2020-038
Description:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL.
Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable date on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities.
Condition:
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were a few quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter’s benefits have been paid. However, the crossmatches for third quarter of 2022, which includes the months of July 2022 to September 2022, were not completed until May 19, 2023, and crossmatches for fourth quarter of 2023, which includes the months of October 2022 to December 2022, were not completed until July 14, 2023. It is also our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed.
Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements to be provided by August 18, 2023. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases on October 5, 2023, auditors could not summarize the data to match amounts reported on the financial statements. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation.
While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding, review controls and processes, and follow-up on the prior year finding. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL.
Cause:
The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office.
Effect:
Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2023 will not be identified and investigated until the latter half of fiscal year 2024. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program.
Recommendation:
The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports.
We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
GDOL Response:
GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports.
Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding.
The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties.
GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024.
Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system.
Summary:
The current unemployment system is obsolete and cannot be remediated at this time. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-030 Improve Controls over the Identification, Recording, and Reporting of Overpayments
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.225 – Unemployment Insurance
17.225 – COVID-19 – Unemployment Insurance
Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023), EUISSA2055A13 (Year:2020)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-029, 2021-038, 2020-038
Description:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
Background Information:
The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions.
Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs:
• Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
• Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work.
• Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits.
In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program.
The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL.
Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable date on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities.
Condition:
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were a few quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter’s benefits have been paid. However, the crossmatches for third quarter of 2022, which includes the months of July 2022 to September 2022, were not completed until May 19, 2023, and crossmatches for fourth quarter of 2023, which includes the months of October 2022 to December 2022, were not completed until July 14, 2023. It is also our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed.
Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements to be provided by August 18, 2023. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases on October 5, 2023, auditors could not summarize the data to match amounts reported on the financial statements. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation.
While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding, review controls and processes, and follow-up on the prior year finding. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL.
Cause:
The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office.
Effect:
Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2023 will not be identified and investigated until the latter half of fiscal year 2024. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program.
Recommendation:
The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports.
We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions.
Views of Responsible Officials:
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings:
Auditor’s Findings:
The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs.
GDOL Response:
GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports.
Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding.
The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties.
GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024.
Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system.
Summary:
The current unemployment system is obsolete and cannot be remediated at this time. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system.
GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2023-025 Improve Controls over Manual Journal Entries
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Labor
Pass-Through Entity: None
AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser
Funded Activities
17.801 – Jobs for Veterans State Grant
Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13
(Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021)
Questioned Costs: $1,220,638
Description:
The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster.
Background Information:
The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities.
The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers.
The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans.
Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023.
Criteria:
As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.”
Condition:
Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program.
Questioned Costs:
Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153.
In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638.
Cause:
The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing.
Effect:
The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment.
Recommendation:
The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately.
Views of Responsible Officials:
We concur with this finding.
2023-031 Strengthen Controls over Review of Certified Payrolls
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: None
Federal Awarding Agency: U.S. Department of Transportation
Pass-Through Entity: None
AL Numbers and Titles: 20.205 – Highway Planning and Construction
20.205 - COVID-19 – Highway Planning and
Construction
Federal Award Numbers: Various – See Table 2023-031
Questioned Costs: None Identified
Description:
The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented.
Background Information:
The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads.
The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed.
The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations.
Criteria:
As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Condition:
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager.
Cause:
The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures.
Effect:
Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates.
Recommendation:
We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews.
Views of Responsible Officials:
We concur with this finding.
2023-031 Strengthen Controls over Review of Certified Payrolls
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: None
Federal Awarding Agency: U.S. Department of Transportation
Pass-Through Entity: None
AL Numbers and Titles: 20.205 – Highway Planning and Construction
20.205 - COVID-19 – Highway Planning and
Construction
Federal Award Numbers: Various – See Table 2023-031
Questioned Costs: None Identified
Description:
The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented.
Background Information:
The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads.
The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed.
The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations.
Criteria:
As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Condition:
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager.
Cause:
The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures.
Effect:
Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates.
Recommendation:
We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews.
Views of Responsible Officials:
We concur with this finding.
2023-031 Strengthen Controls over Review of Certified Payrolls
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: None
Federal Awarding Agency: U.S. Department of Transportation
Pass-Through Entity: None
AL Numbers and Titles: 20.205 – Highway Planning and Construction
20.205 - COVID-19 – Highway Planning and
Construction
Federal Award Numbers: Various – See Table 2023-031
Questioned Costs: None Identified
Description:
The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented.
Background Information:
The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads.
The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed.
The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations.
Criteria:
As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Condition:
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager.
Cause:
The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures.
Effect:
Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates.
Recommendation:
We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews.
Views of Responsible Officials:
We concur with this finding.
2023-032 Improve Controls over Procurement Competitive Bidding
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of the Treasury
Pass-Through Entity: None
AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local
Fiscal Recovery Funds
Federal Award Number: SLFRP1029 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately.
Background Information:
The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, including by providing assistance to
households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ;
2. Respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the recipient that perform
essential work or by providing grants to eligible employers that have eligible workers
who are performing essential work;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency; and
4. Make necessary investments in water, sewer, or broadband infrastructure.
In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS).
Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities.
Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form.
Condition:
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required.
DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process.
Cause:
Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts.
Effect:
Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual.
In addition, DHS could enter into contracts that are not the most advantageous to the State.
Recommendation:
The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-032 Improve Controls over Procurement Competitive Bidding
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of the Treasury
Pass-Through Entity: None
AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local
Fiscal Recovery Funds
Federal Award Number: SLFRP1029 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately.
Background Information:
The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, including by providing assistance to
households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ;
2. Respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the recipient that perform
essential work or by providing grants to eligible employers that have eligible workers
who are performing essential work;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency; and
4. Make necessary investments in water, sewer, or broadband infrastructure.
In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS).
Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities.
Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form.
Condition:
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required.
DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process.
Cause:
Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts.
Effect:
Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual.
In addition, DHS could enter into contracts that are not the most advantageous to the State.
Recommendation:
The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-032 Improve Controls over Procurement Competitive Bidding
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of the Treasury
Pass-Through Entity: None
AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local
Fiscal Recovery Funds
Federal Award Number: SLFRP1029 (Year: 2023)
Questioned Costs: None Identified
Description:
The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately.
Background Information:
The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, including by providing assistance to
households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ;
2. Respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the recipient that perform
essential work or by providing grants to eligible employers that have eligible workers
who are performing essential work;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency; and
4. Make necessary investments in water, sewer, or broadband infrastructure.
In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS).
Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities.
Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form.
Condition:
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required.
DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process.
Cause:
Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts.
Effect:
Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual.
In addition, DHS could enter into contracts that are not the most advantageous to the State.
Recommendation:
The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-020 Improve Controls over Transparency Act Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers
93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services
93.053 – Nutrition Services Incentive Program
93.499 – COVID-19 – Low-Income Household Water Assistance Program
93.568 – Low-Income Home Energy Assistance Program
93.568 – COVID-19 – Low-Income Home Energy Assistance Program
93.667 – Social Services Block Grant
Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-022
Description:
The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely.
Background Information:
The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior;
and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals.
The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services.
The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support.
The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements.
Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website.
As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required.
Cause:
Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs.
Recommendation:
We recommend that the DHS:
• Follow established processes and procedures associated with the FFATA reporting requirements;
• Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner.
Views of Responsible Officials:
The Georgia Department of Human Services (DHS) concurs with the finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-015 Improve Controls over Managed Care Organization Financial Audits
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-012, 2021-028
Description:
The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits.
The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards.
Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO at least once every three years.
Condition:
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH.
Cause:
Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations.
Effect:
Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract.
Views of Responsible Officials:
We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-017
Description:
The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review.
Cause:
In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs.
Effect:
Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members.
Views of Responsible Officials:
We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-017
Description:
The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review.
Cause:
In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs.
Effect:
Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members.
Views of Responsible Officials:
We concur with this finding.
2023-016 Improve Controls over Medicaid Capitation Payment Rates
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-017
Description:
The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review.
Cause:
In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs.
Effect:
Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future.
Recommendation:
The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members.
Views of Responsible Officials:
We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: $42,411
Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023
Description:
The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…”
Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable.
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members.
Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective.
We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage.
Questioned Costs:
Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively.
Cause:
The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency.
Effect:
Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments.
The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid.
Views of Responsible Officials:
We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: $42,411
Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023
Description:
The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…”
Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable.
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members.
Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective.
We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage.
Questioned Costs:
Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively.
Cause:
The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency.
Effect:
Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments.
The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid.
Views of Responsible Officials:
We concur with this finding.
2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members
Compliance Requirement: Activities Allowed or Unallowed
Allowable Costs/Cost Principles
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: $42,411
Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023
Description:
The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state).
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls.
The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.”
Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…”
Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable.
Condition:
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members.
Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective.
We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage.
Questioned Costs:
Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively.
Cause:
The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency.
Effect:
Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments.
The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid.
Views of Responsible Officials:
We concur with this finding.
2023-018 Continue to Strengthen Application Risk Management Program
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044
Description:
The Department of Community Health should continue to strengthen controls over its application risk management program.
Background Information:
See Financial Finding at 2023-003.
Criteria:
See Financial Finding at 2023-003.
Condition:
See Financial Finding at 2023-003.
Cause:
See Financial Finding at 2023-003.
Effect:
See Financial Finding at 2023-003.
Recommendation:
See Financial Finding at 2023-003.
Views of Responsible Officials:
DCH agrees with the finding.
2023-018 Continue to Strengthen Application Risk Management Program
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044
Description:
The Department of Community Health should continue to strengthen controls over its application risk management program.
Background Information:
See Financial Finding at 2023-003.
Criteria:
See Financial Finding at 2023-003.
Condition:
See Financial Finding at 2023-003.
Cause:
See Financial Finding at 2023-003.
Effect:
See Financial Finding at 2023-003.
Recommendation:
See Financial Finding at 2023-003.
Views of Responsible Officials:
DCH agrees with the finding.
2023-018 Continue to Strengthen Application Risk Management Program
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044
Description:
The Department of Community Health should continue to strengthen controls over its application risk management program.
Background Information:
See Financial Finding at 2023-003.
Criteria:
See Financial Finding at 2023-003.
Condition:
See Financial Finding at 2023-003.
Cause:
See Financial Finding at 2023-003.
Effect:
See Financial Finding at 2023-003.
Recommendation:
See Financial Finding at 2023-003.
Views of Responsible Officials:
DCH agrees with the finding.
2023-019 Strengthen Controls over NCCI Program Requirements
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-019
Description:
The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties.
Condition:
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services.
Cause:
The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end.
Effect:
The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services.
Views of Responsible Officials:
We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-019
Description:
The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties.
Condition:
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services.
Cause:
The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end.
Effect:
The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services.
Views of Responsible Officials:
We concur with this finding.
2023-019 Strengthen Controls over NCCI Program Requirements
Compliance Requirement: Special Tests and Provisions
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX)
93.778 – COVID -19 – Medical Assistance Program
(Medicaid: Title XIX)
Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: 2022-019
Description:
The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements.
Background Information:
The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023.
State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate.
As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end.
Criteria:
As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties.
Condition:
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services.
Cause:
The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end.
Effect:
The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards.
Recommendation:
The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services.
Views of Responsible Officials:
We concur with this finding.
2023-021 Improve Controls over Period of Performance
Compliance Requirement: Period of Performance
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Number and Title: 93.958 – Block Grants for Community Mental Health
Federal Award Number: B09SM083833 (Year: 2021)
Questioned Costs: $1,996,195.46
Repeat of Prior Year Finding: 2022-024
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period.
Background Information:
The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
Funds associated with the MHBG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and
liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…”
Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.”
Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions.
Condition:
Our audit of the MHBG program included a review of adjustments with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. Two adjustments were identified as the population, and both were selected for testing. It was noted that both of these transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these adjustments were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy.
Questioned Costs:
Known questioned costs of $1,996,195.46 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award.
Effect:
The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting.
Recommendation:
We recommend that the DBHDD:
• Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner.
• Follow currently established grant close-out processes and procedures associated with period of performance requirements.
• Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-022 Improve Controls over Period of Performance
Compliance Requirement: Period of Performance
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Number and Title: 93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
Federal Award Numbers: B08TI085799 (Year: 2023), 1B08TI083442-01 (Year: 2021)
Questioned Costs: $221,131.74
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period.
Background Information:
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and
liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…”
Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.”
Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions.
Condition:
Our audit of the SABG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. Six expenditures were identified as the population and were all selected for testing. It was noted that three expenditures reviewed were incurred before the period of performance.
In addition, our audit of the SABG program included a review of adjustments with a performance period ending date during the audit period. One adjustment was identified as the population and tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that this transaction was not posted within 90 days of the end of the period of performance as required. Additionally, this expenditure was not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy.
Questioned Costs:
Known questioned costs of $221,131.74 related to the SABG program were identified for expenditures that were incurred before the period of performance or paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs.
Cause:
While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award.
Effect:
The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting.
Recommendation:
We recommend that the DBHDD:
• Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner.
• Follow currently established grant close-out processes and procedures associated with period of performance requirements.
• Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.
2023-023 Improve Controls over Reporting
Compliance Requirement: Reporting
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: None
AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services
93.958 – COVID-19 – Block Grants for Community Mental Health Services
93.959 – Block Grants for Prevention and Treatment
of Substance Abuse
93.959 – COVID-19 – Block Grants for Prevention and
Treatment of Substance Abuse
Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021)
Questioned Costs: None Identified
Repeat of Prior Year Finding: 2022-025
Description:
The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely.
Background Information:
The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan.
The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute.
The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period).
Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website.
Criteria:
As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website.
Condition:
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports.
Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies:
• A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely.
• A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely.
Cause:
Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports.
Effect:
The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly.
Recommendation:
We recommend that the DBHDD:
• Establish and document processes and procedures associated with the FFR and FFATA reporting requirements;
• Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and
• Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements.
Views of Responsible Officials:
DBHDD concurs with the audit finding.