2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-009 – Noncompliance with Federal Equipment Management Regulations at LSU A&M
Award Year: 2018
Award Number: AWDC-002209
Compliance Requirement: Equipment and Real Property Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
Louisiana State University and A&M College (LSU A&M) did not comply with federal equipment management regulations. In a non-statistical sample of 30 items from a population of 1,389 assets indicated by management as being purchased with Research and Development funds for LSU A&M, one (3%) item could not be located.
Criteria:
2 CFR 200.313(d)(1) and 2 CFR 200.313(d)(3) require that equipment records include the identification number, location, condition, source, and award number for each equipment item and adequate safeguards must be developed to prevent loss, damage or theft of property.
Cause:
LSU A&M did not have adequate controls in place to ensure that equipment was properly safeguarded against loss.
Effect:
Failure to comply with federal management regulations increases the risk that assets may be lost or stolen.
Recommendation:
Management should implement internal controls to ensure that equipment is properly safeguarded.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-010 – Inadequate Recovery of Small Rental Property Program Loans
Award Years: 2006, 2007
Award Numbers: B-06-DG-22-0001, B-06-DG-22-0002
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-009)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fiscal year ended June 30, 2023, the Division of Administration, Louisiana Office of Community Development (LOCD) identified five Small Rental Property Program (SRPP) loans totaling $471,293 for property owners under the Community Development Block Grant/State’s Program (CDBG) who failed to comply with one or more of their loan agreement requirements and were assigned to loan recovery status in fiscal year 2023. In addition, while completing their file review, LOCD identified $22,435,810 of outstanding SRPP loans for 131 loans assigned to loan recovery status in previous years, which included increases in loan balances totaling $9,083,940 during the fiscal year. Since LOCD has not recovered these loans, we consider these amounts totaling $9,555,233 to be questioned costs. An additional 678 noncompliant loans identified in previous years totaling $60.6 million remain outstanding. As of June 30, 2023, of the 4,476 outstanding SRPP loans totaling $436.1 million, 648 noncompliant loans totaling $68.7 million were in active recovery status, and LOCD represented that recovery efforts were ongoing to either recoup the loan funds or work with the applicants to bring them into compliance with the state’s continuing requirements of the program. The remaining 166 noncompliant loans totaling $14.8 million have been determined by LOCD to be uncollectable for various reasons such as foreclosure, property seizure, or legal dispute.
Criteria:
OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (now located in 2 CFR 225) stipulates that the state assume responsibility for administering federal awards in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the federal award. In response to hurricanes Katrina and Rita, the state was awarded and has allocated approximately $653 million to the SRPP, as part of the Road Home program. In accordance with the state’s U.S. Department of Housing and Urban Development (HUD)-approved Action Plan Amendment 24, the SRPP offers forgivable loans to qualified property owners who agree to offer rental properties at affordable rents to be occupied by lower-income households. In exchange for accepting loans ranging between $10,000 and $100,000 per rental unit, property owners are required to accept limitations on rents and incomes of renters during an “affordability period,” a specified period of time based on the amount of funding received and the type of work being done (renovation or full construction) ranging between three and 20 years. The loan amounts are determined based on location of property, number of bedrooms, and the poverty level of the renter. In addition to accepting limitations on rents and income of renters, property owners also agree to maintain property insurance and maintain flood insurance, if necessary. These requirements become effective one year after the closing date and remain until the expiration of the “affordability period.” According to the loan agreements, failure to comply with any of the loan requirements shall constitute default and mandatory repayment. Good internal controls would ensure that policies and procedures are in place with an established timeline to monitor compliance with the loan agreements and provide for specific actions (i.e., loan modification, foreclosure, or repayment) if a property owner fails to comply with the loan agreement or does not provide evidence of compliance as required by the loan agreement.
Cause:
In June 2016, HUD issued a monitoring review report with a finding that the SRPP design lacked sufficient fiscal accounting controls and procedures to ensure that CDBG funds identified as ineligible expenses are able to be recaptured and repurposed for eligible uses. Since that time, there have been several monitoring reports indicating progression in this area. In June 2023, HUD issued a formal letter of guidance to LOCD that included recommended actions to resolve the remaining SRPP ineligible costs. In its responses to HUD’s proposals and recommendations, LOCD is working with HUD to implement final corrective action to resolve the HUD issued finding and close out the SRPP.
Effect:
Ultimately, LOCD’s failure to recover loans from noncompliant property owners could result in disallowed costs. The state could be liable for noncompliant awards if disallowed by the federal grantor; however, it is unknown whether the federal government would demand repayment of the awards.
Recommendation:
LOCD should continue working with HUD towards resolving the outstanding questioned costs and closing out the SRPP.
Management’s Response and Corrective Action Plan:
LOCD stated in its response that it will continue to assist rental property owners to become compliant and to resolve any program compliance issues, thus increasing available affordable rental housing and reducing or eliminating the need to recapture funds from rental property owners, where appropriate (B-9).
2023-011 – Restore Louisiana Homeowner Assistance Program Awards Identified for Grant Recovery
Award Year: 2016
Award Number: B-16-DL-22-0001
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-010)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fiscal year ended June 30, 2023, LOCD identified $56,116 in noncompliant Restore Louisiana Homeowner Assistance Program (RLHAP) awards for ten homeowners through established program implementation and monitoring procedures for the CDBG. Since LOCD has not recovered these noncompliant awards at year-end, we consider these amounts to be questioned costs. In addition, 37 noncompliant files totaling $618,085 identified in the previous years are still outstanding. LOCD is actively pursuing collections on the files.
As of June 30, 2023, $669,687,346 in total RLHAP awards have been disbursed to 17,262 homeowners. LOCD is actively reviewing seven files totaling $67,240 to make final determinations of the homeowner’s noncompliant status. At year-end, LOCD reported that 271 homeowner files totaling approximately $4.6 million have been reviewed through its monitoring procedures. Of the 271 homeowners, LOCD reported 54 homeowners were placed in recapture status, 168 homeowners were cleared through the review process, 17 homeowners returned their grant award, in whole or in part, and 32 homeowners entered into repayment plans.
Criteria:
2 CFR 200 Subpart E stipulates that the state assumes responsibility for administering federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the federal award.
In response to the March and August Floods of 2016, the state was awarded approximately $1.07 billion to administer the RLHAP. In accordance with the state’s HUD-approved Action Plan, eligible homeowners must enter into grant agreements with the state which require homeowners to comply with program requirements in exchange for compensation to rehabilitate or reconstruct their damaged property. Homeowners have three program options to choose from based on their progress in the rebuilding process and their capacity to complete their home repair or reconstruction. Eligibility and grant award calculations are determined based on information provided by the homeowner, the results of field inspections, and available third-party datasets. Once eligibility has been established and award amounts have been calculated, funds are awarded to the homeowner upon the effective date of signing the grant agreement, which is referred to as the closing date. Should homeowners experience a change in the circumstances after grant determination or if additional information becomes available after closing, homeowners’ grant calculation or program eligibility may change. In the event the change reduces their amount of eligible funding, RLHAP may require that a homeowner return all or a portion of their award.
Cause:
Circumstances that may result in homeowners being required to repay all or a portion of the award include: duplicative benefits received but not included in initial grant award calculation, information discovered identifying the homeowner as ineligible for the award received, failure to complete construction per program requirements, substantial noncompliance with requirements of grant agreements, voluntary withdrawal from the program, or discovery that the homeowner provided false or misleading information during the grant award process.
Effect:
If LOCD is unable to recover benefits from noncompliant homeowners, disallowed costs could result. The state could be liable for noncompliant awards if disallowed by the federal grantor; however, it is unknown whether the federal government would demand repayment of these awards.
Recommendation:
LOCD should continue its monitoring to identify awards to be placed in recovery and continue recovery efforts to collect those awards determined to be noncompliant.
Management’s Response and Corrective Action Plan:
LOCD agreed that the identified files have been placed in recapture and stated it will continue to follow the established recapture procedures for these grant awards to ensure ultimate compliance (B-11).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-012 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2020 - 2023
Award Numbers: AA347712055A22, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-011)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. In addition, LWC did not adequately review subrecipient Single Audit reports and issue timely management decisions on findings affecting the WIOA Cluster programs. LWC’s WIOA expenditures during state fiscal year 2023 totaled over $56.5 million with approximately $47.1 million provided to subrecipients.
Our review of LWC’s fiscal year 2023 monitoring reports for plan year 2020/fiscal year 2021 disclosed the following for LWC’s 15 subrecipients:
• For five monitoring reports, close out letters were issued between 111 and 183 days after report issuance. For four monitoring reports, close out letters were not issued as of January 2024, while the monitoring reports for these reviews were issued more than 195 days prior. One report included a finding with possible questioned costs of $563,649 that is unresolved at the time of our review.
Our review of LWC’s review of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• For three Single Audit reports with findings affecting the WIOA cluster of programs, management decision letters were issued 66 to 264 days after the due date set by federal regulations. In addition, for two of the three reports, LWC incorrectly issued management decisions letters noting no WIOA affected findings. Each of the noted reports contained one finding affecting the WIOA Cluster programs.
Criteria:
2 CFR 200.332(d) requires that pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
2 CFR 200.332(d)(2) requires that pass-through entities follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients, and 2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the Federal Audit Clearinghouse.
Cause:
LWC policy does not specifically address timeliness requirements for close out letters.
LWC failed to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Effect:
Failure to timely resolve documentation and questioned costs impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor. These risks are also increased by LWC’s failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Recommendation:
LWC management should develop and implement policy ensuring timely close out of monitoring reviews. LWC should also implement adequate internal controls to ensure that it identifies and follows up on subrecipients’ audit findings as specified and issues required management decision letters by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-46).
2023-013 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Year: 2023
Award Number: AA385322255A22
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the WIOA Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the FFATA Subaward Reporting System (FSRS) website required for federal subawards by the Federal Funding Accountability and Transparency Act (FFATA).
While the required data elements for LWC’s 15 WIOA subawards submitted to the FSRS website were complete and accurate, the data submissions for the 15 subawards occurred between one and three months after the due date specified by federal regulations. All 15 subawards executed and submitted during state fiscal year 2023 exceeded $30,000 and collectively totaled over $38.7 million.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submissions. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen internal controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2023-012 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2020 - 2023
Award Numbers: AA347712055A22, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-011)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. In addition, LWC did not adequately review subrecipient Single Audit reports and issue timely management decisions on findings affecting the WIOA Cluster programs. LWC’s WIOA expenditures during state fiscal year 2023 totaled over $56.5 million with approximately $47.1 million provided to subrecipients.
Our review of LWC’s fiscal year 2023 monitoring reports for plan year 2020/fiscal year 2021 disclosed the following for LWC’s 15 subrecipients:
• For five monitoring reports, close out letters were issued between 111 and 183 days after report issuance. For four monitoring reports, close out letters were not issued as of January 2024, while the monitoring reports for these reviews were issued more than 195 days prior. One report included a finding with possible questioned costs of $563,649 that is unresolved at the time of our review.
Our review of LWC’s review of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• For three Single Audit reports with findings affecting the WIOA cluster of programs, management decision letters were issued 66 to 264 days after the due date set by federal regulations. In addition, for two of the three reports, LWC incorrectly issued management decisions letters noting no WIOA affected findings. Each of the noted reports contained one finding affecting the WIOA Cluster programs.
Criteria:
2 CFR 200.332(d) requires that pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
2 CFR 200.332(d)(2) requires that pass-through entities follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients, and 2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the Federal Audit Clearinghouse.
Cause:
LWC policy does not specifically address timeliness requirements for close out letters.
LWC failed to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Effect:
Failure to timely resolve documentation and questioned costs impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor. These risks are also increased by LWC’s failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Recommendation:
LWC management should develop and implement policy ensuring timely close out of monitoring reviews. LWC should also implement adequate internal controls to ensure that it identifies and follows up on subrecipients’ audit findings as specified and issues required management decision letters by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-46).
2023-013 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Year: 2023
Award Number: AA385322255A22
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the WIOA Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the FFATA Subaward Reporting System (FSRS) website required for federal subawards by the Federal Funding Accountability and Transparency Act (FFATA).
While the required data elements for LWC’s 15 WIOA subawards submitted to the FSRS website were complete and accurate, the data submissions for the 15 subawards occurred between one and three months after the due date specified by federal regulations. All 15 subawards executed and submitted during state fiscal year 2023 exceeded $30,000 and collectively totaled over $38.7 million.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submissions. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen internal controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2023-012 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2020 - 2023
Award Numbers: AA347712055A22, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-011)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. In addition, LWC did not adequately review subrecipient Single Audit reports and issue timely management decisions on findings affecting the WIOA Cluster programs. LWC’s WIOA expenditures during state fiscal year 2023 totaled over $56.5 million with approximately $47.1 million provided to subrecipients.
Our review of LWC’s fiscal year 2023 monitoring reports for plan year 2020/fiscal year 2021 disclosed the following for LWC’s 15 subrecipients:
• For five monitoring reports, close out letters were issued between 111 and 183 days after report issuance. For four monitoring reports, close out letters were not issued as of January 2024, while the monitoring reports for these reviews were issued more than 195 days prior. One report included a finding with possible questioned costs of $563,649 that is unresolved at the time of our review.
Our review of LWC’s review of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• For three Single Audit reports with findings affecting the WIOA cluster of programs, management decision letters were issued 66 to 264 days after the due date set by federal regulations. In addition, for two of the three reports, LWC incorrectly issued management decisions letters noting no WIOA affected findings. Each of the noted reports contained one finding affecting the WIOA Cluster programs.
Criteria:
2 CFR 200.332(d) requires that pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
2 CFR 200.332(d)(2) requires that pass-through entities follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients, and 2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the Federal Audit Clearinghouse.
Cause:
LWC policy does not specifically address timeliness requirements for close out letters.
LWC failed to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Effect:
Failure to timely resolve documentation and questioned costs impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor. These risks are also increased by LWC’s failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Recommendation:
LWC management should develop and implement policy ensuring timely close out of monitoring reviews. LWC should also implement adequate internal controls to ensure that it identifies and follows up on subrecipients’ audit findings as specified and issues required management decision letters by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-46).
2023-013 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Year: 2023
Award Number: AA385322255A22
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the WIOA Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the FFATA Subaward Reporting System (FSRS) website required for federal subawards by the Federal Funding Accountability and Transparency Act (FFATA).
While the required data elements for LWC’s 15 WIOA subawards submitted to the FSRS website were complete and accurate, the data submissions for the 15 subawards occurred between one and three months after the due date specified by federal regulations. All 15 subawards executed and submitted during state fiscal year 2023 exceeded $30,000 and collectively totaled over $38.7 million.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submissions. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen internal controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2023-014 – Inadequate Controls over and Noncompliance with Wage Rate Requirements
Award Years: 2004, 2009, 2012, 2019, 2021-2023
Award Number: Not Applicable
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Transportation and Development (DOTD) did not adhere to policies designed to ensure compliance with federal wage rate requirements for construction projects funded through the Highway Planning and Construction program. In addition, DOTD did not comply with a portion of the federal wage rate requirements.
Our procedures disclosed the following:
• From a population of 427 federally-funded projects in the construction phase with expenditures during fiscal year 2023, two (4%) of the 56 projects tested in a non-statistical sample had partial estimates approved for payment prior to DOTD reviewing the required weekly certified payrolls from the contractor.
• From a population of 133 federally-funded projects that were completed during fiscal year 2023, three (21%) of the 14 projects tested in a non-statistical sample did not have an adequate review of the site interviews, including two projects that did not have evidence of review on the site interview form, and one project where the site interview form could not be located, resulting in noncompliance with wage rate requirements. In addition, we reviewed three projects in addition to those sampled above and noted one individually important project did not have evidence of review on the site interview form.
Criteria:
The Davis-Bacon Act (40 USC 3141-3147) requires that all laborers and mechanics employed by contractors or subcontractors on construction work performed on federally-funded highway projects with construction contracts in excess of $2,000 must be paid wages at rates not less than those prevailing on the same type of work on similar construction in the immediate locality as determined by the U.S. Department of Labor (23 USC 113). The contractor or subcontractor must submit weekly certified payrolls for each week any covered work is performed [29 CFR 5.5(a)(3)(ii)(A)] and a statement of compliance. Per 29 CFR 5.6(a)(3), employee interviews should also be conducted to ensure that the work performed by construction workers and mechanics is consistent with the corresponding job titles and wages being reported on the certified payrolls.
To ensure compliance with wage rate requirements, DOTD’s policy is to approve payment of the contractors’ partial estimates after all required certified payrolls for the estimate period are submitted to DOTD. In addition, DOTD’s Engineering Directives and Standards Manual (EDSM) requires that a minimum of one site interview per project be conducted by the Project Engineer on all federally-funded projects with a wage decision.
Cause:
Personnel did not adhere to the guidelines set forth in DOTD’s EDSM related to the required interviews and the practice to only approve construction estimates for payment after the submission of certified weekly payrolls by contractors.
Effect:
Failure to follow established internal controls and guidelines set forth in DOTD’s EDSM resulted in noncompliance with department policy and with the federal wage rate requirements; this could potentially result in contractors not paying laborers and mechanics the prevailing wage rates.
Recommendation:
Management should enforce internal controls and the policies established within DOTD’s EDSM to ensure compliance with federal wage rate requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-53).
2023-014 – Inadequate Controls over and Noncompliance with Wage Rate Requirements
Award Years: 2004, 2009, 2012, 2019, 2021-2023
Award Number: Not Applicable
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Transportation and Development (DOTD) did not adhere to policies designed to ensure compliance with federal wage rate requirements for construction projects funded through the Highway Planning and Construction program. In addition, DOTD did not comply with a portion of the federal wage rate requirements.
Our procedures disclosed the following:
• From a population of 427 federally-funded projects in the construction phase with expenditures during fiscal year 2023, two (4%) of the 56 projects tested in a non-statistical sample had partial estimates approved for payment prior to DOTD reviewing the required weekly certified payrolls from the contractor.
• From a population of 133 federally-funded projects that were completed during fiscal year 2023, three (21%) of the 14 projects tested in a non-statistical sample did not have an adequate review of the site interviews, including two projects that did not have evidence of review on the site interview form, and one project where the site interview form could not be located, resulting in noncompliance with wage rate requirements. In addition, we reviewed three projects in addition to those sampled above and noted one individually important project did not have evidence of review on the site interview form.
Criteria:
The Davis-Bacon Act (40 USC 3141-3147) requires that all laborers and mechanics employed by contractors or subcontractors on construction work performed on federally-funded highway projects with construction contracts in excess of $2,000 must be paid wages at rates not less than those prevailing on the same type of work on similar construction in the immediate locality as determined by the U.S. Department of Labor (23 USC 113). The contractor or subcontractor must submit weekly certified payrolls for each week any covered work is performed [29 CFR 5.5(a)(3)(ii)(A)] and a statement of compliance. Per 29 CFR 5.6(a)(3), employee interviews should also be conducted to ensure that the work performed by construction workers and mechanics is consistent with the corresponding job titles and wages being reported on the certified payrolls.
To ensure compliance with wage rate requirements, DOTD’s policy is to approve payment of the contractors’ partial estimates after all required certified payrolls for the estimate period are submitted to DOTD. In addition, DOTD’s Engineering Directives and Standards Manual (EDSM) requires that a minimum of one site interview per project be conducted by the Project Engineer on all federally-funded projects with a wage decision.
Cause:
Personnel did not adhere to the guidelines set forth in DOTD’s EDSM related to the required interviews and the practice to only approve construction estimates for payment after the submission of certified weekly payrolls by contractors.
Effect:
Failure to follow established internal controls and guidelines set forth in DOTD’s EDSM resulted in noncompliance with department policy and with the federal wage rate requirements; this could potentially result in contractors not paying laborers and mechanics the prevailing wage rates.
Recommendation:
Management should enforce internal controls and the policies established within DOTD’s EDSM to ensure compliance with federal wage rate requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-53).
2023-015 – Untimely Submission of Summary of Samples and Test Results Form
Award Years: 2004–2006, 2012–2013, 2015, 2017-2022
Award Numbers: Not Applicable
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DOTD did not have adequate controls in place to ensure the Summary of Samples and Test Results Form (Form 2059), which is part of DOTD’s project close-out documentation, was completed timely for projects of the Highway Planning and Construction program. DOTD’s Construction Contract Administration Manual requires the Summary of Samples and Test Results Form to be submitted with the project close-out documentation. In practice, DOTD requires this form to be submitted within 90 days of final acceptance of the project. The Summary of Samples and Test Results Form is certified by applicable engineers and includes documentation relating to the quality of materials used for the project, including the sampling plans and test results of the materials.
In a non-statistical sample of 16 projects reviewed from a population of 160 projects receiving final acceptance in fiscal year 2023, DOTD did not ensure the Summary of Samples and Test Results Form was completed within 90 days of the project’s final acceptance for nine (56%) of the projects tested.
• For four (25%) of these projects, the form was completed untimely, ranging from 107 to 175 days after final acceptance.
• For five (31%) of these projects, the form was not completed as of November 2023, with final acceptance dates in October 2022, December 2022, March 2023, May 2023, and June 2023.
Criteria:
23 CFR 637.205(a) requires that state transportation departments develop a quality assurance program which will assure that the materials and workmanship incorporated into each federal-aid highway construction project are in conformity with the requirements of the approved plans and specifications.
Cause:
DOTD did not ensure that the district engineers approved and submitted the Summary of Samples and Test Results Form to DOTD Headquarters in a timely manner.
Effect:
Untimely completion of the Summary of Samples and Test Results Form delays validation that the sampling and testing results were in accordance with DOTD’s quality assurance program. The absence of such documentation could result in a lack of support that the quality of materials and workmanship used met the requirements for a federally funded project.
Recommendation:
DOTD should continue tracking projects receiving final acceptance and emphasize the importance of timely submittal of the Summary of Samples and Test Results Form to district engineers. In addition, DOTD may consider alternative methods for district engineers to document their review and approval of the sampling and testing results.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-56).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-018 - Control Weakness over Higher Education Emergency Relief Fund Reporting
Award Year: 2023
Award Numbers: P425E200926, P425F201887, P425J200055
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-015)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
SUBR did not ensure the accuracy of the annual report for the HEERF program, and Southern University Law Center (SULC) did not maintain supporting information for portions of the HEERF program annual report.
Based on our procedures, the following differences were identified:
• The HEERF - Student Aid Portion (84.425E) was fully expended in calendar year 2022. The total of emergency financial aid grants awarded to students included on the 2020, 2021, and 2022 annual reports was $243,869 less than the total amount awarded and drawn down by SUBR.
• There were 15 less SULC graduate students still enrolled at the university than what was reported on the annual report. Also, there were 14 more SULC graduate students that withdrew from the university than what was included on the annual report. These differences persisted in the annual report when categorizing the students as either full-time or part-time, by race/ethnicity, gender, and age. SULC management represented that the enrollment information included in the annual report matched previously prepared support, but management could not provide such support.
Criteria:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18004(e), CRRSAA Section 314(e), and the American Rescue Plan (ARP) Act Section 2003 require an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require.
Cause:
SUBR procedures to prepare the HEERF annual report were not sufficient to ensure the total program award amount and student data were reported accurately. Also, SULC procedures did not ensure certain supporting information used to compile student counts were retained. This is the fourth consecutive year we have reported control weaknesses over HEERF reporting.
Effect:
Failure to maintain adequate controls related to preparing the HEERF annual report and retaining support for certain amounts on the report increases the risk that errors or omissions may occur and remain undetected resulting in noncompliance with federal requirements.
Recommendation:
Management should strengthen its procedures over the preparation of the annual report and retention of supporting documentation to ensure compliance with federal reporting requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-51).
2023-016 – Inadequate Controls over and Noncompliance with Higher Education Emergency Relief Fund Requirements
Award Year: 2023
Award Number: P425F201650
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
Central Louisiana Technical Community College (CLTCC) overdrew $139,483 of Higher Education Emergency Relief Fund (HEERF) grant funds in fiscal year 2023 as a result of incorrectly including the Oakdale campus activity in their calculation of lost revenue for state fiscal year 2023. CLTCC transferred the operations of the Oakdale campus to SOWELA Technical Community College on July 1, 2018. The transfer of the Oakdale campus was not associated with coronavirus, as required by the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) Section 314(c)(1) for HEERF funding.
Criteria:
Per the American Rescue Plan, the same terms and conditions of the CRRSAA apply. Per the CRRSAA Section 314(c)(1), an institution of higher education may use HEERF to defray expenses associated with coronavirus (including lost revenue).
On March 19, 2021, the U.S. Department of Education (USDOE) published a HEERF I, II, and III Lost Revenue Frequently Asked Questions (FAQ) to provide further clarification regarding the calculation of lost revenue. Per the FAQ under Question No. 5, if the lost revenue is directly attributable to a cause other than the COVID-19 pandemic, the institution may not include those lost revenues in its estimation of its lost revenue for the HEERF grant programs.
Cause:
CLTCC did not have adequate controls in place over lost revenue calculations for HEERF funding to ensure compliance with guidance provided by the USDOE.
Effect:
Failure to adequately review and follow federal guidance increases the risk that unallowable costs could be reimbursed by a federal agency.
Recommendation:
Management should ensure adequate controls are in place to ensure compliance with federal regulations and follow guidance provided by the USDOE for the calculation of lost revenues. CLTCC should also revise its lost revenue calculation and return any overdrawn funds to the federal grantor.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2023-017 - Control Weakness over Higher Education Emergency Relief Fund Requirements
Award Year: 2023
Award Number: P425F201887
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-016)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, Southern University at Baton Rouge’s (SUBR) calculation of lost revenue under HEERF had errors. SUBR failed to include one category of revenues, included the incorrect amount for another category of revenues, and improperly included revenues not related to higher education.
Criteria:
Per the American Rescue Plan, the same terms and conditions of the CRRSAA apply. Per the CRRSAA Section 314(c)(1), an institution of higher education may use HEERF to defray expenses associated with coronavirus (including lost revenue).
On March 19, 2021, the USDOE published a HEERF I, II, and III Lost Revenue FAQ to provide further clarification regarding the calculation of lost revenue. Per the FAQ under Question No. 9, an institution’s calculation of lost revenue must be consistent with the cost principles of the Uniform Guidance (2 CFR 200 Subpart E): must be accorded consistent treatment (e.g., if using the institution’s fiscal year as a baseline, the institution must estimate lost revenue over the course of a fiscal year) and be consistent with policies and procedures that apply uniformly to federally-financed and other activities of the institution.
Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Cause:
SUBR did not have an effective review process to ensure the lost revenue calculation was accurate and only included revenues that could be reimbursed by the federal grantor.
Effect:
Failure to adequately review the lost revenue calculations resulted in a net under draw of federal funds and increases the risk that unallowable costs could be reimbursed by the federal agency.
Recommendation:
Management should strengthen its review process to ensure the calculation of lost revenues is accurate and only includes revenues that meet federal program requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2023-018 - Control Weakness over Higher Education Emergency Relief Fund Reporting
Award Year: 2023
Award Numbers: P425E200926, P425F201887, P425J200055
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-015)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
SUBR did not ensure the accuracy of the annual report for the HEERF program, and Southern University Law Center (SULC) did not maintain supporting information for portions of the HEERF program annual report.
Based on our procedures, the following differences were identified:
• The HEERF - Student Aid Portion (84.425E) was fully expended in calendar year 2022. The total of emergency financial aid grants awarded to students included on the 2020, 2021, and 2022 annual reports was $243,869 less than the total amount awarded and drawn down by SUBR.
• There were 15 less SULC graduate students still enrolled at the university than what was reported on the annual report. Also, there were 14 more SULC graduate students that withdrew from the university than what was included on the annual report. These differences persisted in the annual report when categorizing the students as either full-time or part-time, by race/ethnicity, gender, and age. SULC management represented that the enrollment information included in the annual report matched previously prepared support, but management could not provide such support.
Criteria:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18004(e), CRRSAA Section 314(e), and the American Rescue Plan (ARP) Act Section 2003 require an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require.
Cause:
SUBR procedures to prepare the HEERF annual report were not sufficient to ensure the total program award amount and student data were reported accurately. Also, SULC procedures did not ensure certain supporting information used to compile student counts were retained. This is the fourth consecutive year we have reported control weaknesses over HEERF reporting.
Effect:
Failure to maintain adequate controls related to preparing the HEERF annual report and retaining support for certain amounts on the report increases the risk that errors or omissions may occur and remain undetected resulting in noncompliance with federal requirements.
Recommendation:
Management should strengthen its procedures over the preparation of the annual report and retention of supporting documentation to ensure compliance with federal reporting requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-51).
2023-018 - Control Weakness over Higher Education Emergency Relief Fund Reporting
Award Year: 2023
Award Numbers: P425E200926, P425F201887, P425J200055
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-015)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
SUBR did not ensure the accuracy of the annual report for the HEERF program, and Southern University Law Center (SULC) did not maintain supporting information for portions of the HEERF program annual report.
Based on our procedures, the following differences were identified:
• The HEERF - Student Aid Portion (84.425E) was fully expended in calendar year 2022. The total of emergency financial aid grants awarded to students included on the 2020, 2021, and 2022 annual reports was $243,869 less than the total amount awarded and drawn down by SUBR.
• There were 15 less SULC graduate students still enrolled at the university than what was reported on the annual report. Also, there were 14 more SULC graduate students that withdrew from the university than what was included on the annual report. These differences persisted in the annual report when categorizing the students as either full-time or part-time, by race/ethnicity, gender, and age. SULC management represented that the enrollment information included in the annual report matched previously prepared support, but management could not provide such support.
Criteria:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18004(e), CRRSAA Section 314(e), and the American Rescue Plan (ARP) Act Section 2003 require an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require.
Cause:
SUBR procedures to prepare the HEERF annual report were not sufficient to ensure the total program award amount and student data were reported accurately. Also, SULC procedures did not ensure certain supporting information used to compile student counts were retained. This is the fourth consecutive year we have reported control weaknesses over HEERF reporting.
Effect:
Failure to maintain adequate controls related to preparing the HEERF annual report and retaining support for certain amounts on the report increases the risk that errors or omissions may occur and remain undetected resulting in noncompliance with federal requirements.
Recommendation:
Management should strengthen its procedures over the preparation of the annual report and retention of supporting documentation to ensure compliance with federal reporting requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-51).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-028 - Inadequate Controls over Payroll
Award Year: 2023
Award Numbers: NU62PS924522, NU90TP922016
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2022-004)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, the Louisiana Department of Health, Office of Public Health (OPH) did not ensure payroll expenditures were certified and approved for the Public Health Emergency Preparedness program and the HIV Prevention Activities Health Department Based program. Exceptions for each federal program are as follows:
• For the Public Health Emergency Preparedness program, a non-statistical sample of 60 payroll transactions was tested from a population of 1,553 transactions totaling $4,760,920. One (2%) time statement was not certified by the employee, and four (7%) time statements were not approved by the employees’ supervisors.
• For the HIV Prevention Activities Health Department Based program, a non-statistical sample of 120 payroll transactions was tested from a population of 1,015 transactions totaling $434,661. Two (2%) time statements were not certified by the employees, and three (3%) time statements were not approved by the employees’ supervisors.
Criteria:
2 CFR 200.430(i) states that records must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, the records must comply with the established accounting policies and practices of the non-federal entity.
The Division of Administration Personnel Policy No. 99 requires employees and supervisors to certify and/or approve time statements for accuracy. Timekeepers are responsible for reviewing the LaGov ZP241 eCertification report prior to processing to identify any employees who have not certified their time statements and any supervisors who have not approved their staff’s time statements.
Cause:
OPH lacked sufficient controls to ensure electronic time statements were properly certified and approved in accordance with federal and state regulations.
Effect:
Failure to adequately approve program expenditures increases the risk that unallowable costs could be reimbursed by the federal grantor.
Recommendation:
OPH should ensure employees comply with existing policies and procedures, including properly certifying and approving electronic time statements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-36).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-019 - Noncompliance with and Control Weakness over Social Services Block Grant Activities Allowed or Unallowed
Award Years: 2022, 2023
Award Numbers: 2201LASOSR, 2301LASOSR
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) transferred $16 million of Temporary Assistance for Needy Families (TANF) grant funds to the Social Services Block Grant (SSBG) during fiscal year 2023. As of June 30, 2023, DCFS did not have a formalized process in place to ensure TANF transfers to SSBG were only used for programs or services for children or their families whose income is less than 200 percent of the poverty level.
Criteria:
Per 45 CFR 75.303(a), the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.
Per 42 USC 604(d)(3)(B), all TANF amounts paid to a state that are used to carry out state programs under SSBG shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line.
Cause:
As a result of not having formalized procedures, DCFS utilized the $16 million of TANF funds transferred during fiscal year 2023 on salaries for DCFS caseworkers through its Public Assistance Cost Allocation Plan, which is not an allowed activity.
Effect:
Failure to implement proper controls over managing SSBG expenditures resulted in noncompliance with federal regulations and $16 million in questioned costs.
Recommendation:
While subsequent to June 30, 2023, DCFS developed written policies and procedures; DCFS should ensure the income requirements applicable to the TANF transfers to SSBG are met and funds are used in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-5).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-021 - Inadequate Controls over Billing for Behavioral Health Services
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-025)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LDH, the Managed Care Organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in Medicaid and the Children’s Health Insurance Program (CHIP) were properly billed and that improper encounters were denied. For fiscal year 2023, we identified approximately $16 million in encounters for services between July 1, 2022, and June 30, 2023, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors:
• Providers were paid $11,544,123 for 158,173 encounters that were billed using incorrect procedure and modifier codes.
• Providers were paid $4,459,886 more than indicated on approved fee schedules for 59,902 encounters for behavioral health services.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Although implementation of this protocol began in fiscal year 2023, all quarters were not completed prior to the end of the fiscal year. Auditors also noted that the EQR’s analysis excluded encounters with location modifiers and included providers that were approved to bill in excess of the fee schedule. Finally, the analysis did not appear to evaluate if the rate billed on the encounter matched the education level modifier.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also used this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-21).
2023-022 - Inadequate Controls over Reporting and Other Federal Compliance Requirements for the Medicaid and Children’s Health
Insurance Programs
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirements: Matching, Earmarking, Period of Performance, Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH erroneously double-reported expenditures for the Medicaid program, resulting in questioned costs, and did not complete certain quarterly checklist reviews intended to ensure compliance with the reporting and matching federal compliance requirements for the Medicaid program and the reporting, period of performance, matching, and earmarking federal compliance requirements for the CHIP program.
LDH improperly included the same $16.6 million Medicaid expenditure on both the September 30, 2022, and March 31, 2023, quarterly federal expenditure reports. In addition, LDH did not complete two of the four (50%) quarterly checklist reviews for fiscal year 2023.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. The Medicaid and CHIP programs require quarterly reporting to Centers for Medicare and Medicaid Services (CMS) detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not ensure their controls over federal requirements were completed for every quarter during fiscal year 2023. In addition, LDH did not accurately complete the quarterly reconciliation, which is intended to ensure all items are accurately reported on the quarterly federal expenditure report.
Effect:
Double-reporting expenditures resulted in $14.9 million in federal questioned costs for the year ending June 30, 2023. As a result of not completing quarterly checklist reviews, LDH failed to detect the misreporting of a $1.7 million recoupment of Disproportionate Share Hospital payments on the wrong federal year schedule for the June 30, 2023, quarterly federal expenditure report.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports to ensure federal expenditures are accurately reported and should ensure all quarterly checklist reviews are completed.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-23).
Auditor’s Additional Comments:
Management's response stated, "LDH disagrees that the quarterly checklist is intended to demonstrate compliance with the federal reporting requirements." LDH management previously represented that the quarterly checklist was part of LDH's internal control process to document the preparation and review of the quarterly federal expenditure reports. As stated in the finding, the noncompliance associated with federal reporting requirements occurred because LDH did not ensure their internal controls over federal requirements were completed for every quarter during fiscal year 2023.
2023-024 - Inadequate Internal Controls over Eligibility Determinations
Award Years: 2019 - 2023
Award Numbers: 1905LA5MAP, 2005LA5021, 2005LA5MAP, 2105LA5021, 2105LA5MAP, 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-028)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medicaid and CHIP programs for the state fiscal year ending June 30, 2023.
From a population of 81,874,016 Medicaid Per-Member-Per-Month (PMPM) and fee-for-service (FFS) payments totaling $13.1 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Seventeen (28%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for Medicaid:
• For one payment, LDH personnel did not discontinue coverage on a recipient who moved out of state.
• For one payment, LDH personnel did not perform all required eligibility determinations before enrolling the recipient; therefore, the recipient was invalidly enrolled during fiscal year 2023.
• For one payment, LDH did not perform all required eligibility determinations before transitioning the recipient to another Medicaid Group.
• For 14 payments, renewals were not performed for the recipients during the state fiscal year as required by federal regulations.
In addition, from a population of 6,352,535 CHIP PMPM and FFS payments totaling $527.9 million, a non-statistical sample of 60 CHIP payments was selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Fifteen (25%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for CHIP:
• For one payment, LDH personnel did not discontinue coverage on a recipient that was invalidly enrolled prior to the start of the Public Health Emergency (PHE).
• For one payment, LDH personnel did not discontinue coverage on a recipient who became ineligible during the fiscal year due to enrollment in a separate CHIP program.
• For 13 payments, LDH did not follow policies and procedures regarding documentation of renewals.
Finally, in an audit report issued in August of 2023 by the Louisiana Legislative Auditor’s Performance Audit Services titled Medicaid Residency, it was discovered that LDH failed to discontinue coverage for four Medicaid recipients who moved out of state.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a recipient must meet eligibility factors and the recipient case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
42 CFR 433.400 also states in order to claim the temporary increase in the federal medical assistance percentage, states must maintain the Medicaid enrollment of “validly enrolled beneficiaries” in one of three tiers of coverage. States may terminate individuals not validly enrolled.
Per State Health Official Letter #21-007, the 12-month postpartum continuous eligibility period is not available to beneficiaries enrolled under the unborn child option (separate CHIP program). In addition, per CMS guidance in the planning COVID-19 FAQs, "The requirements in sections 6008(b)(1) and (b)(2) of the Families First Coronavirus Response Act (FFCRA) to maintain eligibility and premiums in the FFCRA do not apply to separate CHIPs."
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid eligibility manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility decisions, including performance of annual renewals, per federal regulations and the Medicaid eligibility manual.
Effect:
Proper eligibility determination and renewals are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $217,026 in federal funds in relation to the Medicaid recipients who moved out of the state or were invalidly enrolled. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Questioned costs totaling $15,249 in federal funds in relation to the two CHIP recipients whose coverage was not discontinued. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Recommendation:
LDH should ensure its employees follow procedures relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-27).
Auditor’s Additional Comments:
LDH noted in its response it did not concur with the errors noted for renewals not performed for both Medicaid and CHIP. LDH stated, “During the PHE, LDH was operating under a March 25, 2020 CMS approved waiver for certain flexibilities in meeting the timeliness of Medicaid renewals. LDH used the flexibility to suspend processing of standard renewals.” While CMS granted flexibilities for completing the renewals at a future date, it did not appear that CMS was granting approval for suspension of renewals. CMS also notified LDH that federal regulation requires the agency to document the reason for the delay in each case record, but there was no evidence of this in the exceptions noted above.
2023-025 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2023. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are to be paid to the MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2022, through June 30, 2023, LDH paid out 31,571 Medicaid program maternity kick payments totaling $385 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 101 kick payments totaling $887,955 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
During the period July 1, 2022, through June 30, 2023, LDH paid out 4,909 CHIP maternity kick payments totaling $55 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified 9 kick payments totaling $79,182 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
Criteria:
Louisiana Administrative Code Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require a triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their annual review process. In previous years, LDH had procedures in place to perform periodic ad hoc reviews of kick payments that were no longer supported by a triggering event due to the original event having been voided by the plan. It was determined that LDH and the Medicaid Fiscal Intermediary have not performed this annual process since December of 2021.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or no longer have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure the Medicaid Fiscal Intermediary is reviewing all maternity kick payments to ensure they are supported with a triggering event. When payments are identified that are no longer supported by satisfactory evidence, LDH should ensure the payments are recouped from the provider.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-30).
Auditor’s Additional Comments:
LDH noted in its response that it disagreed on the number of unsupported kick payments. As noted in the finding, the maternity kick payments did not have a triggering event as of June 30, 2023. The 35 kick payments mentioned in Management’s response had trigger events submitted after June 30, 2023, which is outside the audit period.
2023-026 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-029)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the sixth consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 28,733 providers paid during fiscal year 2023, it was determined that 8,183 (28%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medicaid agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and CHIP fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal was launched in fiscal year 2022, LDH gave providers until December 31, 2022, to enroll. Providers then had their claims denied for dates of service on or after January 1, 2023, if they had not enrolled through the enrollment portal. These deadlines followed LDH’s corrective action plan from fiscal year 2022; however, due to the timing of the deadlines, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2023 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2023-027 - Weakness in Controls over and Noncompliance with Provider Overpayments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-031)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments and, for the second consecutive year, did not provide sufficient appropriate audit evidence of compliance with federal regulations regarding the return of the federal portion of provider overpayments to the CMS in the appropriate quarter. In a non-statistical sample of 60 provider overpayments, LDH only provided supporting documentation for seven. As a result, we did not have the evidence to support whether LDH had correctly identified the date of discovery or properly returned overpayments to CMS.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
Cause:
LDH did not provide proper supporting documentation for the auditor to test federal regulations over provider overpayments. In addition, LDH’s controls were not suitably designed to correctly identify the date of discovery for provider overpayments.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should ensure they are able to provide supporting documentation timely for the amounts reported in the quarterly CMS reports for provider overpayments. In addition, LDH should strengthen internal controls to ensure identification of the correct date of discovery for provider overpayments and compliance with federal regulations regarding the timely return of those overpayments.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-34).
2023-028 - Inadequate Controls over Payroll
Award Year: 2023
Award Numbers: NU62PS924522, NU90TP922016
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2022-004)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, the Louisiana Department of Health, Office of Public Health (OPH) did not ensure payroll expenditures were certified and approved for the Public Health Emergency Preparedness program and the HIV Prevention Activities Health Department Based program. Exceptions for each federal program are as follows:
• For the Public Health Emergency Preparedness program, a non-statistical sample of 60 payroll transactions was tested from a population of 1,553 transactions totaling $4,760,920. One (2%) time statement was not certified by the employee, and four (7%) time statements were not approved by the employees’ supervisors.
• For the HIV Prevention Activities Health Department Based program, a non-statistical sample of 120 payroll transactions was tested from a population of 1,015 transactions totaling $434,661. Two (2%) time statements were not certified by the employees, and three (3%) time statements were not approved by the employees’ supervisors.
Criteria:
2 CFR 200.430(i) states that records must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, the records must comply with the established accounting policies and practices of the non-federal entity.
The Division of Administration Personnel Policy No. 99 requires employees and supervisors to certify and/or approve time statements for accuracy. Timekeepers are responsible for reviewing the LaGov ZP241 eCertification report prior to processing to identify any employees who have not certified their time statements and any supervisors who have not approved their staff’s time statements.
Cause:
OPH lacked sufficient controls to ensure electronic time statements were properly certified and approved in accordance with federal and state regulations.
Effect:
Failure to adequately approve program expenditures increases the risk that unallowable costs could be reimbursed by the federal grantor.
Recommendation:
OPH should ensure employees comply with existing policies and procedures, including properly certifying and approving electronic time statements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-36).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-029 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-034)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LSUHSC-S did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal R&D Cluster awards from a population of 58 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2023. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 24 key personnel assigned to the selected awards.
We noted two of 24 (8%) key personnel had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor, and there was no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(c) states that for non-construction federal awards, recipients must request prior approvals from federal awarding agencies for one or more of the following program or budget-related reasons: (i) change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval); (ii) change in a key person specified in the application or the federal award; (iii) the disengagement from the project for more than three months, or a 25% reduction in time devoted to the project, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising their Time and Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-40).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-029 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-034)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LSUHSC-S did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal R&D Cluster awards from a population of 58 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2023. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 24 key personnel assigned to the selected awards.
We noted two of 24 (8%) key personnel had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor, and there was no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(c) states that for non-construction federal awards, recipients must request prior approvals from federal awarding agencies for one or more of the following program or budget-related reasons: (i) change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval); (ii) change in a key person specified in the application or the federal award; (iii) the disengagement from the project for more than three months, or a 25% reduction in time devoted to the project, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising their Time and Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-40).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-020 - Inadequate Controls over and Noncompliance with National Correct Coding Initiative Requirements
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-024)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the Louisiana Department of Health (LDH) failed to properly implement and monitor National Correct Coding Initiative Requirements (NCCI) for Medically Unlikely edits (MUE) and Procedure-to-procedure (PTP) edits for the Medical Assistance Program (Medicaid) fee-for-service (FFS) claims. MUE is an edit on claims in which the number of units billed on the claim are more than what is considered necessary/allowed for a particular procedure code and PTP is an edit on claims in which one specific procedure code is not allowed to be billed with a different specific procedure code on the same recipient on the same day by the same provider.
Our testing of NCCI edits included all FFS claims for Durable Medical Equipment (DME), Outpatient Hospital Service (OP), and Practitioner and Ambulatory Surgical Center (PRA) paid in state fiscal year 2023. These claims were subject to two edit types: MUE and PTP.
In a test of 6,240,335 paid claims to determine if the proper NCCI MUE and PTP edits had been implemented, the following was noted:
• 1,588 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI MUE and denied. These NCCI MUE edit errors resulted in questioned costs of $126,549 in federal funds.
• 43 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI PTP edit and denied. These NCCI PTP edit errors resulted in questioned costs of $1,663 in federal funds.
Criteria:
Section 1903(r) of the Social Security Act requires State Medicaid agencies to incorporate NCCI methodologies into State Medicaid programs. Federal regulations and the NCCI Medicaid Technical Guidance Manual contains requirements for implementation of the NCCI methodologies.
Cause:
LDH noted that required NCCI MUE edits were not applied to OP and DME FFS claims due to system constraints for the first three quarters of the fiscal year. In April 2023, LDH implemented the newest version of the clinical editing product ClaimsXten, which now houses all of the required Medicaid NCCI edits. Once implemented, LDH requested the Medicaid Fiscal Intermediary to reprocess all OP and DME claims for fiscal year 2023 in order to identify claims that should have been evaluated by an NCCI edit and denied. The Medicaid Fiscal Intermediary reprocessed all claims as requested, however, they did not recoup the payments associated with the identified claims.
Effect:
Failure to properly implement and enforce all required NCCI edits increases the likelihood that FFS claims, which should be denied, could potentially be paid.
Recommendation:
LDH management should ensure all required NCCI edits are properly applied to FFS claims.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-17).
2023-021 - Inadequate Controls over Billing for Behavioral Health Services
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-025)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LDH, the Managed Care Organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in Medicaid and the Children’s Health Insurance Program (CHIP) were properly billed and that improper encounters were denied. For fiscal year 2023, we identified approximately $16 million in encounters for services between July 1, 2022, and June 30, 2023, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors:
• Providers were paid $11,544,123 for 158,173 encounters that were billed using incorrect procedure and modifier codes.
• Providers were paid $4,459,886 more than indicated on approved fee schedules for 59,902 encounters for behavioral health services.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Although implementation of this protocol began in fiscal year 2023, all quarters were not completed prior to the end of the fiscal year. Auditors also noted that the EQR’s analysis excluded encounters with location modifiers and included providers that were approved to bill in excess of the fee schedule. Finally, the analysis did not appear to evaluate if the rate billed on the encounter matched the education level modifier.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also used this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-21).
2023-022 - Inadequate Controls over Reporting and Other Federal Compliance Requirements for the Medicaid and Children’s Health
Insurance Programs
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirements: Matching, Earmarking, Period of Performance, Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH erroneously double-reported expenditures for the Medicaid program, resulting in questioned costs, and did not complete certain quarterly checklist reviews intended to ensure compliance with the reporting and matching federal compliance requirements for the Medicaid program and the reporting, period of performance, matching, and earmarking federal compliance requirements for the CHIP program.
LDH improperly included the same $16.6 million Medicaid expenditure on both the September 30, 2022, and March 31, 2023, quarterly federal expenditure reports. In addition, LDH did not complete two of the four (50%) quarterly checklist reviews for fiscal year 2023.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. The Medicaid and CHIP programs require quarterly reporting to Centers for Medicare and Medicaid Services (CMS) detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not ensure their controls over federal requirements were completed for every quarter during fiscal year 2023. In addition, LDH did not accurately complete the quarterly reconciliation, which is intended to ensure all items are accurately reported on the quarterly federal expenditure report.
Effect:
Double-reporting expenditures resulted in $14.9 million in federal questioned costs for the year ending June 30, 2023. As a result of not completing quarterly checklist reviews, LDH failed to detect the misreporting of a $1.7 million recoupment of Disproportionate Share Hospital payments on the wrong federal year schedule for the June 30, 2023, quarterly federal expenditure report.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports to ensure federal expenditures are accurately reported and should ensure all quarterly checklist reviews are completed.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-23).
Auditor’s Additional Comments:
Management's response stated, "LDH disagrees that the quarterly checklist is intended to demonstrate compliance with the federal reporting requirements." LDH management previously represented that the quarterly checklist was part of LDH's internal control process to document the preparation and review of the quarterly federal expenditure reports. As stated in the finding, the noncompliance associated with federal reporting requirements occurred because LDH did not ensure their internal controls over federal requirements were completed for every quarter during fiscal year 2023.
2023-023 - Inadequate Controls over Waiver and Support Coordination Service Providers
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH paid Medicaid Home and Community Based Services claims for the New Opportunities Waiver (NOW) for waiver services that were not documented in accordance with established policies. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW waiver services included 1,004 claims paid in fiscal year 2023 totaling $219,057 paid to three providers for 19 recipients. Our test identified errors for 371 claims totaling $21,222 in federal funds, with some claims having multiple errors. The following errors were noted:
• For 349 claims for 18 recipients, the waiver services provider did not provide adequate documentation to support billed services.
• For 55 claims for 18 recipients, the waiver services provider did not provide documentation to support deviations from the approved Plan of Care (POC), where the units of service provided were below the minimum amount required.
In addition to testing NOW waiver services, we also tested claims paid for support coordination services for the 19 waiver recipients tested. In our test of 311 claims paid in fiscal year 2023 totaling $62,667 paid to four support coordination providers for the 19 recipients, the support coordination service provider did not provide adequate documentation to support billed services for 16 claims for five recipients. The federally funded portion of these claims totaled $2,347.
Criteria:
Waiver services are accessed through support coordinators who assist with development and monitoring of the recipient’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the state of Louisiana, and is the basis for federal and state reviews of the program.
The recipients case record is required to include a copy of the approved POC, including any revisions. The POC documents the recipient’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a recipient based on the approved POC. According to the NOW provider manual, an occasional or temporary deviation from a recipient’s scheduled services is acceptable as long as the services altered are recipient-driven, person-centered, and occur within the prior authorization.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
Cause:
The errors noted in testing occurred because LDH failed to ensure that NOW waiver and support coordination providers follow LDH policies related to proper recordkeeping and supporting documentation.
Effect:
Without adequate documentation, a provider cannot substantiate, and auditors cannot verify that the deviations were recipient-driven and person-centered as required.
Without adequate supporting documentation and compliance with LDH established policies, there is reduced assurance that billed services were actually performed, recipients are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $23,569 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies for waiver and support coordination services are enforced, including documentation to support claims and evidence that deviations from the approved POC meet the needs of the recipient. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-25).
Auditor’s Additional Comments:
LDH noted in its response that it did not concur with the determination of inadequate controls and that a combination of factors and not documentation alone must be considered when determining whether billed services were performed. As noted in the finding, LDH’s provider manuals identify the required documentation for billing, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. The errors noted above included one or a combination of these items to be missing for the recipient files tested; therefore, LDH failed to ensure that providers followed LDH policies.
2023-024 - Inadequate Internal Controls over Eligibility Determinations
Award Years: 2019 - 2023
Award Numbers: 1905LA5MAP, 2005LA5021, 2005LA5MAP, 2105LA5021, 2105LA5MAP, 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-028)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medicaid and CHIP programs for the state fiscal year ending June 30, 2023.
From a population of 81,874,016 Medicaid Per-Member-Per-Month (PMPM) and fee-for-service (FFS) payments totaling $13.1 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Seventeen (28%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for Medicaid:
• For one payment, LDH personnel did not discontinue coverage on a recipient who moved out of state.
• For one payment, LDH personnel did not perform all required eligibility determinations before enrolling the recipient; therefore, the recipient was invalidly enrolled during fiscal year 2023.
• For one payment, LDH did not perform all required eligibility determinations before transitioning the recipient to another Medicaid Group.
• For 14 payments, renewals were not performed for the recipients during the state fiscal year as required by federal regulations.
In addition, from a population of 6,352,535 CHIP PMPM and FFS payments totaling $527.9 million, a non-statistical sample of 60 CHIP payments was selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Fifteen (25%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for CHIP:
• For one payment, LDH personnel did not discontinue coverage on a recipient that was invalidly enrolled prior to the start of the Public Health Emergency (PHE).
• For one payment, LDH personnel did not discontinue coverage on a recipient who became ineligible during the fiscal year due to enrollment in a separate CHIP program.
• For 13 payments, LDH did not follow policies and procedures regarding documentation of renewals.
Finally, in an audit report issued in August of 2023 by the Louisiana Legislative Auditor’s Performance Audit Services titled Medicaid Residency, it was discovered that LDH failed to discontinue coverage for four Medicaid recipients who moved out of state.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a recipient must meet eligibility factors and the recipient case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
42 CFR 433.400 also states in order to claim the temporary increase in the federal medical assistance percentage, states must maintain the Medicaid enrollment of “validly enrolled beneficiaries” in one of three tiers of coverage. States may terminate individuals not validly enrolled.
Per State Health Official Letter #21-007, the 12-month postpartum continuous eligibility period is not available to beneficiaries enrolled under the unborn child option (separate CHIP program). In addition, per CMS guidance in the planning COVID-19 FAQs, "The requirements in sections 6008(b)(1) and (b)(2) of the Families First Coronavirus Response Act (FFCRA) to maintain eligibility and premiums in the FFCRA do not apply to separate CHIPs."
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid eligibility manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility decisions, including performance of annual renewals, per federal regulations and the Medicaid eligibility manual.
Effect:
Proper eligibility determination and renewals are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $217,026 in federal funds in relation to the Medicaid recipients who moved out of the state or were invalidly enrolled. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Questioned costs totaling $15,249 in federal funds in relation to the two CHIP recipients whose coverage was not discontinued. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Recommendation:
LDH should ensure its employees follow procedures relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-27).
Auditor’s Additional Comments:
LDH noted in its response it did not concur with the errors noted for renewals not performed for both Medicaid and CHIP. LDH stated, “During the PHE, LDH was operating under a March 25, 2020 CMS approved waiver for certain flexibilities in meeting the timeliness of Medicaid renewals. LDH used the flexibility to suspend processing of standard renewals.” While CMS granted flexibilities for completing the renewals at a future date, it did not appear that CMS was granting approval for suspension of renewals. CMS also notified LDH that federal regulation requires the agency to document the reason for the delay in each case record, but there was no evidence of this in the exceptions noted above.
2023-025 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2023. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are to be paid to the MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2022, through June 30, 2023, LDH paid out 31,571 Medicaid program maternity kick payments totaling $385 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 101 kick payments totaling $887,955 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
During the period July 1, 2022, through June 30, 2023, LDH paid out 4,909 CHIP maternity kick payments totaling $55 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified 9 kick payments totaling $79,182 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
Criteria:
Louisiana Administrative Code Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require a triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their annual review process. In previous years, LDH had procedures in place to perform periodic ad hoc reviews of kick payments that were no longer supported by a triggering event due to the original event having been voided by the plan. It was determined that LDH and the Medicaid Fiscal Intermediary have not performed this annual process since December of 2021.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or no longer have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure the Medicaid Fiscal Intermediary is reviewing all maternity kick payments to ensure they are supported with a triggering event. When payments are identified that are no longer supported by satisfactory evidence, LDH should ensure the payments are recouped from the provider.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-30).
Auditor’s Additional Comments:
LDH noted in its response that it disagreed on the number of unsupported kick payments. As noted in the finding, the maternity kick payments did not have a triggering event as of June 30, 2023. The 35 kick payments mentioned in Management’s response had trigger events submitted after June 30, 2023, which is outside the audit period.
2023-026 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-029)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the sixth consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 28,733 providers paid during fiscal year 2023, it was determined that 8,183 (28%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medicaid agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and CHIP fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal was launched in fiscal year 2022, LDH gave providers until December 31, 2022, to enroll. Providers then had their claims denied for dates of service on or after January 1, 2023, if they had not enrolled through the enrollment portal. These deadlines followed LDH’s corrective action plan from fiscal year 2022; however, due to the timing of the deadlines, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2023 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2023-027 - Weakness in Controls over and Noncompliance with Provider Overpayments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-031)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments and, for the second consecutive year, did not provide sufficient appropriate audit evidence of compliance with federal regulations regarding the return of the federal portion of provider overpayments to the CMS in the appropriate quarter. In a non-statistical sample of 60 provider overpayments, LDH only provided supporting documentation for seven. As a result, we did not have the evidence to support whether LDH had correctly identified the date of discovery or properly returned overpayments to CMS.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
Cause:
LDH did not provide proper supporting documentation for the auditor to test federal regulations over provider overpayments. In addition, LDH’s controls were not suitably designed to correctly identify the date of discovery for provider overpayments.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should ensure they are able to provide supporting documentation timely for the amounts reported in the quarterly CMS reports for provider overpayments. In addition, LDH should strengthen internal controls to ensure identification of the correct date of discovery for provider overpayments and compliance with federal regulations regarding the timely return of those overpayments.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-34).
2023-020 - Inadequate Controls over and Noncompliance with National Correct Coding Initiative Requirements
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-024)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the Louisiana Department of Health (LDH) failed to properly implement and monitor National Correct Coding Initiative Requirements (NCCI) for Medically Unlikely edits (MUE) and Procedure-to-procedure (PTP) edits for the Medical Assistance Program (Medicaid) fee-for-service (FFS) claims. MUE is an edit on claims in which the number of units billed on the claim are more than what is considered necessary/allowed for a particular procedure code and PTP is an edit on claims in which one specific procedure code is not allowed to be billed with a different specific procedure code on the same recipient on the same day by the same provider.
Our testing of NCCI edits included all FFS claims for Durable Medical Equipment (DME), Outpatient Hospital Service (OP), and Practitioner and Ambulatory Surgical Center (PRA) paid in state fiscal year 2023. These claims were subject to two edit types: MUE and PTP.
In a test of 6,240,335 paid claims to determine if the proper NCCI MUE and PTP edits had been implemented, the following was noted:
• 1,588 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI MUE and denied. These NCCI MUE edit errors resulted in questioned costs of $126,549 in federal funds.
• 43 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI PTP edit and denied. These NCCI PTP edit errors resulted in questioned costs of $1,663 in federal funds.
Criteria:
Section 1903(r) of the Social Security Act requires State Medicaid agencies to incorporate NCCI methodologies into State Medicaid programs. Federal regulations and the NCCI Medicaid Technical Guidance Manual contains requirements for implementation of the NCCI methodologies.
Cause:
LDH noted that required NCCI MUE edits were not applied to OP and DME FFS claims due to system constraints for the first three quarters of the fiscal year. In April 2023, LDH implemented the newest version of the clinical editing product ClaimsXten, which now houses all of the required Medicaid NCCI edits. Once implemented, LDH requested the Medicaid Fiscal Intermediary to reprocess all OP and DME claims for fiscal year 2023 in order to identify claims that should have been evaluated by an NCCI edit and denied. The Medicaid Fiscal Intermediary reprocessed all claims as requested, however, they did not recoup the payments associated with the identified claims.
Effect:
Failure to properly implement and enforce all required NCCI edits increases the likelihood that FFS claims, which should be denied, could potentially be paid.
Recommendation:
LDH management should ensure all required NCCI edits are properly applied to FFS claims.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-17).
2023-021 - Inadequate Controls over Billing for Behavioral Health Services
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-025)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LDH, the Managed Care Organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in Medicaid and the Children’s Health Insurance Program (CHIP) were properly billed and that improper encounters were denied. For fiscal year 2023, we identified approximately $16 million in encounters for services between July 1, 2022, and June 30, 2023, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors:
• Providers were paid $11,544,123 for 158,173 encounters that were billed using incorrect procedure and modifier codes.
• Providers were paid $4,459,886 more than indicated on approved fee schedules for 59,902 encounters for behavioral health services.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Although implementation of this protocol began in fiscal year 2023, all quarters were not completed prior to the end of the fiscal year. Auditors also noted that the EQR’s analysis excluded encounters with location modifiers and included providers that were approved to bill in excess of the fee schedule. Finally, the analysis did not appear to evaluate if the rate billed on the encounter matched the education level modifier.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also used this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-21).
2023-022 - Inadequate Controls over Reporting and Other Federal Compliance Requirements for the Medicaid and Children’s Health
Insurance Programs
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirements: Matching, Earmarking, Period of Performance, Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH erroneously double-reported expenditures for the Medicaid program, resulting in questioned costs, and did not complete certain quarterly checklist reviews intended to ensure compliance with the reporting and matching federal compliance requirements for the Medicaid program and the reporting, period of performance, matching, and earmarking federal compliance requirements for the CHIP program.
LDH improperly included the same $16.6 million Medicaid expenditure on both the September 30, 2022, and March 31, 2023, quarterly federal expenditure reports. In addition, LDH did not complete two of the four (50%) quarterly checklist reviews for fiscal year 2023.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. The Medicaid and CHIP programs require quarterly reporting to Centers for Medicare and Medicaid Services (CMS) detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not ensure their controls over federal requirements were completed for every quarter during fiscal year 2023. In addition, LDH did not accurately complete the quarterly reconciliation, which is intended to ensure all items are accurately reported on the quarterly federal expenditure report.
Effect:
Double-reporting expenditures resulted in $14.9 million in federal questioned costs for the year ending June 30, 2023. As a result of not completing quarterly checklist reviews, LDH failed to detect the misreporting of a $1.7 million recoupment of Disproportionate Share Hospital payments on the wrong federal year schedule for the June 30, 2023, quarterly federal expenditure report.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports to ensure federal expenditures are accurately reported and should ensure all quarterly checklist reviews are completed.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-23).
Auditor’s Additional Comments:
Management's response stated, "LDH disagrees that the quarterly checklist is intended to demonstrate compliance with the federal reporting requirements." LDH management previously represented that the quarterly checklist was part of LDH's internal control process to document the preparation and review of the quarterly federal expenditure reports. As stated in the finding, the noncompliance associated with federal reporting requirements occurred because LDH did not ensure their internal controls over federal requirements were completed for every quarter during fiscal year 2023.
2023-023 - Inadequate Controls over Waiver and Support Coordination Service Providers
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH paid Medicaid Home and Community Based Services claims for the New Opportunities Waiver (NOW) for waiver services that were not documented in accordance with established policies. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW waiver services included 1,004 claims paid in fiscal year 2023 totaling $219,057 paid to three providers for 19 recipients. Our test identified errors for 371 claims totaling $21,222 in federal funds, with some claims having multiple errors. The following errors were noted:
• For 349 claims for 18 recipients, the waiver services provider did not provide adequate documentation to support billed services.
• For 55 claims for 18 recipients, the waiver services provider did not provide documentation to support deviations from the approved Plan of Care (POC), where the units of service provided were below the minimum amount required.
In addition to testing NOW waiver services, we also tested claims paid for support coordination services for the 19 waiver recipients tested. In our test of 311 claims paid in fiscal year 2023 totaling $62,667 paid to four support coordination providers for the 19 recipients, the support coordination service provider did not provide adequate documentation to support billed services for 16 claims for five recipients. The federally funded portion of these claims totaled $2,347.
Criteria:
Waiver services are accessed through support coordinators who assist with development and monitoring of the recipient’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the state of Louisiana, and is the basis for federal and state reviews of the program.
The recipients case record is required to include a copy of the approved POC, including any revisions. The POC documents the recipient’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a recipient based on the approved POC. According to the NOW provider manual, an occasional or temporary deviation from a recipient’s scheduled services is acceptable as long as the services altered are recipient-driven, person-centered, and occur within the prior authorization.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
Cause:
The errors noted in testing occurred because LDH failed to ensure that NOW waiver and support coordination providers follow LDH policies related to proper recordkeeping and supporting documentation.
Effect:
Without adequate documentation, a provider cannot substantiate, and auditors cannot verify that the deviations were recipient-driven and person-centered as required.
Without adequate supporting documentation and compliance with LDH established policies, there is reduced assurance that billed services were actually performed, recipients are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $23,569 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies for waiver and support coordination services are enforced, including documentation to support claims and evidence that deviations from the approved POC meet the needs of the recipient. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-25).
Auditor’s Additional Comments:
LDH noted in its response that it did not concur with the determination of inadequate controls and that a combination of factors and not documentation alone must be considered when determining whether billed services were performed. As noted in the finding, LDH’s provider manuals identify the required documentation for billing, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. The errors noted above included one or a combination of these items to be missing for the recipient files tested; therefore, LDH failed to ensure that providers followed LDH policies.
2023-024 - Inadequate Internal Controls over Eligibility Determinations
Award Years: 2019 - 2023
Award Numbers: 1905LA5MAP, 2005LA5021, 2005LA5MAP, 2105LA5021, 2105LA5MAP, 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-028)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medicaid and CHIP programs for the state fiscal year ending June 30, 2023.
From a population of 81,874,016 Medicaid Per-Member-Per-Month (PMPM) and fee-for-service (FFS) payments totaling $13.1 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Seventeen (28%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for Medicaid:
• For one payment, LDH personnel did not discontinue coverage on a recipient who moved out of state.
• For one payment, LDH personnel did not perform all required eligibility determinations before enrolling the recipient; therefore, the recipient was invalidly enrolled during fiscal year 2023.
• For one payment, LDH did not perform all required eligibility determinations before transitioning the recipient to another Medicaid Group.
• For 14 payments, renewals were not performed for the recipients during the state fiscal year as required by federal regulations.
In addition, from a population of 6,352,535 CHIP PMPM and FFS payments totaling $527.9 million, a non-statistical sample of 60 CHIP payments was selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Fifteen (25%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for CHIP:
• For one payment, LDH personnel did not discontinue coverage on a recipient that was invalidly enrolled prior to the start of the Public Health Emergency (PHE).
• For one payment, LDH personnel did not discontinue coverage on a recipient who became ineligible during the fiscal year due to enrollment in a separate CHIP program.
• For 13 payments, LDH did not follow policies and procedures regarding documentation of renewals.
Finally, in an audit report issued in August of 2023 by the Louisiana Legislative Auditor’s Performance Audit Services titled Medicaid Residency, it was discovered that LDH failed to discontinue coverage for four Medicaid recipients who moved out of state.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a recipient must meet eligibility factors and the recipient case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
42 CFR 433.400 also states in order to claim the temporary increase in the federal medical assistance percentage, states must maintain the Medicaid enrollment of “validly enrolled beneficiaries” in one of three tiers of coverage. States may terminate individuals not validly enrolled.
Per State Health Official Letter #21-007, the 12-month postpartum continuous eligibility period is not available to beneficiaries enrolled under the unborn child option (separate CHIP program). In addition, per CMS guidance in the planning COVID-19 FAQs, "The requirements in sections 6008(b)(1) and (b)(2) of the Families First Coronavirus Response Act (FFCRA) to maintain eligibility and premiums in the FFCRA do not apply to separate CHIPs."
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid eligibility manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility decisions, including performance of annual renewals, per federal regulations and the Medicaid eligibility manual.
Effect:
Proper eligibility determination and renewals are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $217,026 in federal funds in relation to the Medicaid recipients who moved out of the state or were invalidly enrolled. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Questioned costs totaling $15,249 in federal funds in relation to the two CHIP recipients whose coverage was not discontinued. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Recommendation:
LDH should ensure its employees follow procedures relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-27).
Auditor’s Additional Comments:
LDH noted in its response it did not concur with the errors noted for renewals not performed for both Medicaid and CHIP. LDH stated, “During the PHE, LDH was operating under a March 25, 2020 CMS approved waiver for certain flexibilities in meeting the timeliness of Medicaid renewals. LDH used the flexibility to suspend processing of standard renewals.” While CMS granted flexibilities for completing the renewals at a future date, it did not appear that CMS was granting approval for suspension of renewals. CMS also notified LDH that federal regulation requires the agency to document the reason for the delay in each case record, but there was no evidence of this in the exceptions noted above.
2023-025 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2023. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are to be paid to the MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2022, through June 30, 2023, LDH paid out 31,571 Medicaid program maternity kick payments totaling $385 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 101 kick payments totaling $887,955 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
During the period July 1, 2022, through June 30, 2023, LDH paid out 4,909 CHIP maternity kick payments totaling $55 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified 9 kick payments totaling $79,182 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
Criteria:
Louisiana Administrative Code Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require a triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their annual review process. In previous years, LDH had procedures in place to perform periodic ad hoc reviews of kick payments that were no longer supported by a triggering event due to the original event having been voided by the plan. It was determined that LDH and the Medicaid Fiscal Intermediary have not performed this annual process since December of 2021.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or no longer have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure the Medicaid Fiscal Intermediary is reviewing all maternity kick payments to ensure they are supported with a triggering event. When payments are identified that are no longer supported by satisfactory evidence, LDH should ensure the payments are recouped from the provider.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-30).
Auditor’s Additional Comments:
LDH noted in its response that it disagreed on the number of unsupported kick payments. As noted in the finding, the maternity kick payments did not have a triggering event as of June 30, 2023. The 35 kick payments mentioned in Management’s response had trigger events submitted after June 30, 2023, which is outside the audit period.
2023-026 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-029)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the sixth consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 28,733 providers paid during fiscal year 2023, it was determined that 8,183 (28%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medicaid agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and CHIP fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal was launched in fiscal year 2022, LDH gave providers until December 31, 2022, to enroll. Providers then had their claims denied for dates of service on or after January 1, 2023, if they had not enrolled through the enrollment portal. These deadlines followed LDH’s corrective action plan from fiscal year 2022; however, due to the timing of the deadlines, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2023 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2023-027 - Weakness in Controls over and Noncompliance with Provider Overpayments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-031)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments and, for the second consecutive year, did not provide sufficient appropriate audit evidence of compliance with federal regulations regarding the return of the federal portion of provider overpayments to the CMS in the appropriate quarter. In a non-statistical sample of 60 provider overpayments, LDH only provided supporting documentation for seven. As a result, we did not have the evidence to support whether LDH had correctly identified the date of discovery or properly returned overpayments to CMS.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
Cause:
LDH did not provide proper supporting documentation for the auditor to test federal regulations over provider overpayments. In addition, LDH’s controls were not suitably designed to correctly identify the date of discovery for provider overpayments.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should ensure they are able to provide supporting documentation timely for the amounts reported in the quarterly CMS reports for provider overpayments. In addition, LDH should strengthen internal controls to ensure identification of the correct date of discovery for provider overpayments and compliance with federal regulations regarding the timely return of those overpayments.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-34).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-030 - Weakness in Controls over Payroll
Award Years: 2022, 2023
Award Numbers: 2204LADI00, 2304LADI00
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS did not follow established payroll policies and procedures for the certification and approval of time statements, as well as for the approval of leave requests. This is the second consecutive year a weakness in controls over payroll has been reported. In our review of 45 time statements department-wide for the period July 1, 2022, through June 30, 2023, we identified the following:
• Ten (22%) time statements were approved by supervisors between 1 and 252 days after the date required by policy.
• Three (7%) time statements were certified by employees between 20 and 70 days after the date required by policy.
• Two (4%) time statements were not certified by employees nor approved by the supervisors prior to payroll processing.
In addition, our review of payroll system reports identified 8,133 (5%) of 156,777 leave requests that were auto-approved by the system. This occurs when leave has been requested, but the employee’s supervisor did not take timely action to approve/reject the system leave request before the end of the pay period in which the leave was taken. All open leave requests in the system will be auto-approved on the last day of the applicable pay period in order for the employee to receive payment.
We also performed procedures specifically on the Disability Insurance/SSI Cluster, a major federal program for fiscal year 2023. In a statistical sample of 40 payroll transactions from a population of 46,568 Disability Insurance/SSI Cluster payroll transactions totaling $19,646,061, three (8%) of the time statements tested were not approved by the employees’ supervisors.
Criteria:
DCFS payroll policy requires employees to certify their time statements by the Tuesday following the close of the pay period in the Cross-Application Time Statements (CATS) system, and supervisors are required to approve time statements in the CATS system by the Wednesday following the close of the pay period. Supervisors are also responsible for approving or rejecting all leave requests before the end of the applicable pay period. Also, 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Cause:
DCFS employees did not adhere to the established policies and procedures over payroll to certify and approve time statements in a timely manner or properly approve leave requests.
Effect:
As a result, there is an increased risk that errors and/or fraud could occur and not be detected in a timely manner and that unallowable costs could be reimbursed by the federal grantor.
Recommendation:
Management should ensure employees comply with existing policies and procedures, including certifying and approving time statements and leave requests in a timely manner.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-6).
2023-031 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2020 - 2022
Award Numbers: EMT-2020-FM-053, EMT-2020-FM-E004, EMT-2021-FM-024, EMT-2021-FM-E001, EMT-2022-FM-E001
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) did not comply with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for the Flood Mitigation Assistance program. As of June 30, 2023, GOHSEP had not entered subaward information into the FFATA Subaward Reporting System (FSRS) for any of the 50 subawards of $30,000 or more totaling $125,920,379, related to five separate federal awards.
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
GOHSEP management indicated that the noncompliance occurred due to having limited access to the FSRS to enter the awards meeting the requirement.
Effect:
Not reporting obligating actions to FSRS prevents the public from having access to accurate information on how GOHSEP is obligating federal funds.
Recommendation:
GOHSEP should strengthen internal controls to ensure that appropriate personnel have the necessary access to FSRS and are timely entering the required award information for FFATA reporting in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-15).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-009 – Noncompliance with Federal Equipment Management Regulations at LSU A&M
Award Year: 2018
Award Number: AWDC-002209
Compliance Requirement: Equipment and Real Property Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
Louisiana State University and A&M College (LSU A&M) did not comply with federal equipment management regulations. In a non-statistical sample of 30 items from a population of 1,389 assets indicated by management as being purchased with Research and Development funds for LSU A&M, one (3%) item could not be located.
Criteria:
2 CFR 200.313(d)(1) and 2 CFR 200.313(d)(3) require that equipment records include the identification number, location, condition, source, and award number for each equipment item and adequate safeguards must be developed to prevent loss, damage or theft of property.
Cause:
LSU A&M did not have adequate controls in place to ensure that equipment was properly safeguarded against loss.
Effect:
Failure to comply with federal management regulations increases the risk that assets may be lost or stolen.
Recommendation:
Management should implement internal controls to ensure that equipment is properly safeguarded.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-010 – Inadequate Recovery of Small Rental Property Program Loans
Award Years: 2006, 2007
Award Numbers: B-06-DG-22-0001, B-06-DG-22-0002
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-009)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fiscal year ended June 30, 2023, the Division of Administration, Louisiana Office of Community Development (LOCD) identified five Small Rental Property Program (SRPP) loans totaling $471,293 for property owners under the Community Development Block Grant/State’s Program (CDBG) who failed to comply with one or more of their loan agreement requirements and were assigned to loan recovery status in fiscal year 2023. In addition, while completing their file review, LOCD identified $22,435,810 of outstanding SRPP loans for 131 loans assigned to loan recovery status in previous years, which included increases in loan balances totaling $9,083,940 during the fiscal year. Since LOCD has not recovered these loans, we consider these amounts totaling $9,555,233 to be questioned costs. An additional 678 noncompliant loans identified in previous years totaling $60.6 million remain outstanding. As of June 30, 2023, of the 4,476 outstanding SRPP loans totaling $436.1 million, 648 noncompliant loans totaling $68.7 million were in active recovery status, and LOCD represented that recovery efforts were ongoing to either recoup the loan funds or work with the applicants to bring them into compliance with the state’s continuing requirements of the program. The remaining 166 noncompliant loans totaling $14.8 million have been determined by LOCD to be uncollectable for various reasons such as foreclosure, property seizure, or legal dispute.
Criteria:
OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (now located in 2 CFR 225) stipulates that the state assume responsibility for administering federal awards in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the federal award. In response to hurricanes Katrina and Rita, the state was awarded and has allocated approximately $653 million to the SRPP, as part of the Road Home program. In accordance with the state’s U.S. Department of Housing and Urban Development (HUD)-approved Action Plan Amendment 24, the SRPP offers forgivable loans to qualified property owners who agree to offer rental properties at affordable rents to be occupied by lower-income households. In exchange for accepting loans ranging between $10,000 and $100,000 per rental unit, property owners are required to accept limitations on rents and incomes of renters during an “affordability period,” a specified period of time based on the amount of funding received and the type of work being done (renovation or full construction) ranging between three and 20 years. The loan amounts are determined based on location of property, number of bedrooms, and the poverty level of the renter. In addition to accepting limitations on rents and income of renters, property owners also agree to maintain property insurance and maintain flood insurance, if necessary. These requirements become effective one year after the closing date and remain until the expiration of the “affordability period.” According to the loan agreements, failure to comply with any of the loan requirements shall constitute default and mandatory repayment. Good internal controls would ensure that policies and procedures are in place with an established timeline to monitor compliance with the loan agreements and provide for specific actions (i.e., loan modification, foreclosure, or repayment) if a property owner fails to comply with the loan agreement or does not provide evidence of compliance as required by the loan agreement.
Cause:
In June 2016, HUD issued a monitoring review report with a finding that the SRPP design lacked sufficient fiscal accounting controls and procedures to ensure that CDBG funds identified as ineligible expenses are able to be recaptured and repurposed for eligible uses. Since that time, there have been several monitoring reports indicating progression in this area. In June 2023, HUD issued a formal letter of guidance to LOCD that included recommended actions to resolve the remaining SRPP ineligible costs. In its responses to HUD’s proposals and recommendations, LOCD is working with HUD to implement final corrective action to resolve the HUD issued finding and close out the SRPP.
Effect:
Ultimately, LOCD’s failure to recover loans from noncompliant property owners could result in disallowed costs. The state could be liable for noncompliant awards if disallowed by the federal grantor; however, it is unknown whether the federal government would demand repayment of the awards.
Recommendation:
LOCD should continue working with HUD towards resolving the outstanding questioned costs and closing out the SRPP.
Management’s Response and Corrective Action Plan:
LOCD stated in its response that it will continue to assist rental property owners to become compliant and to resolve any program compliance issues, thus increasing available affordable rental housing and reducing or eliminating the need to recapture funds from rental property owners, where appropriate (B-9).
2023-011 – Restore Louisiana Homeowner Assistance Program Awards Identified for Grant Recovery
Award Year: 2016
Award Number: B-16-DL-22-0001
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-010)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fiscal year ended June 30, 2023, LOCD identified $56,116 in noncompliant Restore Louisiana Homeowner Assistance Program (RLHAP) awards for ten homeowners through established program implementation and monitoring procedures for the CDBG. Since LOCD has not recovered these noncompliant awards at year-end, we consider these amounts to be questioned costs. In addition, 37 noncompliant files totaling $618,085 identified in the previous years are still outstanding. LOCD is actively pursuing collections on the files.
As of June 30, 2023, $669,687,346 in total RLHAP awards have been disbursed to 17,262 homeowners. LOCD is actively reviewing seven files totaling $67,240 to make final determinations of the homeowner’s noncompliant status. At year-end, LOCD reported that 271 homeowner files totaling approximately $4.6 million have been reviewed through its monitoring procedures. Of the 271 homeowners, LOCD reported 54 homeowners were placed in recapture status, 168 homeowners were cleared through the review process, 17 homeowners returned their grant award, in whole or in part, and 32 homeowners entered into repayment plans.
Criteria:
2 CFR 200 Subpart E stipulates that the state assumes responsibility for administering federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the federal award.
In response to the March and August Floods of 2016, the state was awarded approximately $1.07 billion to administer the RLHAP. In accordance with the state’s HUD-approved Action Plan, eligible homeowners must enter into grant agreements with the state which require homeowners to comply with program requirements in exchange for compensation to rehabilitate or reconstruct their damaged property. Homeowners have three program options to choose from based on their progress in the rebuilding process and their capacity to complete their home repair or reconstruction. Eligibility and grant award calculations are determined based on information provided by the homeowner, the results of field inspections, and available third-party datasets. Once eligibility has been established and award amounts have been calculated, funds are awarded to the homeowner upon the effective date of signing the grant agreement, which is referred to as the closing date. Should homeowners experience a change in the circumstances after grant determination or if additional information becomes available after closing, homeowners’ grant calculation or program eligibility may change. In the event the change reduces their amount of eligible funding, RLHAP may require that a homeowner return all or a portion of their award.
Cause:
Circumstances that may result in homeowners being required to repay all or a portion of the award include: duplicative benefits received but not included in initial grant award calculation, information discovered identifying the homeowner as ineligible for the award received, failure to complete construction per program requirements, substantial noncompliance with requirements of grant agreements, voluntary withdrawal from the program, or discovery that the homeowner provided false or misleading information during the grant award process.
Effect:
If LOCD is unable to recover benefits from noncompliant homeowners, disallowed costs could result. The state could be liable for noncompliant awards if disallowed by the federal grantor; however, it is unknown whether the federal government would demand repayment of these awards.
Recommendation:
LOCD should continue its monitoring to identify awards to be placed in recovery and continue recovery efforts to collect those awards determined to be noncompliant.
Management’s Response and Corrective Action Plan:
LOCD agreed that the identified files have been placed in recapture and stated it will continue to follow the established recapture procedures for these grant awards to ensure ultimate compliance (B-11).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-012 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2020 - 2023
Award Numbers: AA347712055A22, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-011)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. In addition, LWC did not adequately review subrecipient Single Audit reports and issue timely management decisions on findings affecting the WIOA Cluster programs. LWC’s WIOA expenditures during state fiscal year 2023 totaled over $56.5 million with approximately $47.1 million provided to subrecipients.
Our review of LWC’s fiscal year 2023 monitoring reports for plan year 2020/fiscal year 2021 disclosed the following for LWC’s 15 subrecipients:
• For five monitoring reports, close out letters were issued between 111 and 183 days after report issuance. For four monitoring reports, close out letters were not issued as of January 2024, while the monitoring reports for these reviews were issued more than 195 days prior. One report included a finding with possible questioned costs of $563,649 that is unresolved at the time of our review.
Our review of LWC’s review of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• For three Single Audit reports with findings affecting the WIOA cluster of programs, management decision letters were issued 66 to 264 days after the due date set by federal regulations. In addition, for two of the three reports, LWC incorrectly issued management decisions letters noting no WIOA affected findings. Each of the noted reports contained one finding affecting the WIOA Cluster programs.
Criteria:
2 CFR 200.332(d) requires that pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
2 CFR 200.332(d)(2) requires that pass-through entities follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients, and 2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the Federal Audit Clearinghouse.
Cause:
LWC policy does not specifically address timeliness requirements for close out letters.
LWC failed to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Effect:
Failure to timely resolve documentation and questioned costs impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor. These risks are also increased by LWC’s failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Recommendation:
LWC management should develop and implement policy ensuring timely close out of monitoring reviews. LWC should also implement adequate internal controls to ensure that it identifies and follows up on subrecipients’ audit findings as specified and issues required management decision letters by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-46).
2023-013 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Year: 2023
Award Number: AA385322255A22
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the WIOA Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the FFATA Subaward Reporting System (FSRS) website required for federal subawards by the Federal Funding Accountability and Transparency Act (FFATA).
While the required data elements for LWC’s 15 WIOA subawards submitted to the FSRS website were complete and accurate, the data submissions for the 15 subawards occurred between one and three months after the due date specified by federal regulations. All 15 subawards executed and submitted during state fiscal year 2023 exceeded $30,000 and collectively totaled over $38.7 million.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submissions. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen internal controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2023-012 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2020 - 2023
Award Numbers: AA347712055A22, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-011)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. In addition, LWC did not adequately review subrecipient Single Audit reports and issue timely management decisions on findings affecting the WIOA Cluster programs. LWC’s WIOA expenditures during state fiscal year 2023 totaled over $56.5 million with approximately $47.1 million provided to subrecipients.
Our review of LWC’s fiscal year 2023 monitoring reports for plan year 2020/fiscal year 2021 disclosed the following for LWC’s 15 subrecipients:
• For five monitoring reports, close out letters were issued between 111 and 183 days after report issuance. For four monitoring reports, close out letters were not issued as of January 2024, while the monitoring reports for these reviews were issued more than 195 days prior. One report included a finding with possible questioned costs of $563,649 that is unresolved at the time of our review.
Our review of LWC’s review of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• For three Single Audit reports with findings affecting the WIOA cluster of programs, management decision letters were issued 66 to 264 days after the due date set by federal regulations. In addition, for two of the three reports, LWC incorrectly issued management decisions letters noting no WIOA affected findings. Each of the noted reports contained one finding affecting the WIOA Cluster programs.
Criteria:
2 CFR 200.332(d) requires that pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
2 CFR 200.332(d)(2) requires that pass-through entities follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients, and 2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the Federal Audit Clearinghouse.
Cause:
LWC policy does not specifically address timeliness requirements for close out letters.
LWC failed to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Effect:
Failure to timely resolve documentation and questioned costs impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor. These risks are also increased by LWC’s failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Recommendation:
LWC management should develop and implement policy ensuring timely close out of monitoring reviews. LWC should also implement adequate internal controls to ensure that it identifies and follows up on subrecipients’ audit findings as specified and issues required management decision letters by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-46).
2023-013 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Year: 2023
Award Number: AA385322255A22
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the WIOA Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the FFATA Subaward Reporting System (FSRS) website required for federal subawards by the Federal Funding Accountability and Transparency Act (FFATA).
While the required data elements for LWC’s 15 WIOA subawards submitted to the FSRS website were complete and accurate, the data submissions for the 15 subawards occurred between one and three months after the due date specified by federal regulations. All 15 subawards executed and submitted during state fiscal year 2023 exceeded $30,000 and collectively totaled over $38.7 million.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submissions. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen internal controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2023-012 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2020 - 2023
Award Numbers: AA347712055A22, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-011)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. In addition, LWC did not adequately review subrecipient Single Audit reports and issue timely management decisions on findings affecting the WIOA Cluster programs. LWC’s WIOA expenditures during state fiscal year 2023 totaled over $56.5 million with approximately $47.1 million provided to subrecipients.
Our review of LWC’s fiscal year 2023 monitoring reports for plan year 2020/fiscal year 2021 disclosed the following for LWC’s 15 subrecipients:
• For five monitoring reports, close out letters were issued between 111 and 183 days after report issuance. For four monitoring reports, close out letters were not issued as of January 2024, while the monitoring reports for these reviews were issued more than 195 days prior. One report included a finding with possible questioned costs of $563,649 that is unresolved at the time of our review.
Our review of LWC’s review of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• For three Single Audit reports with findings affecting the WIOA cluster of programs, management decision letters were issued 66 to 264 days after the due date set by federal regulations. In addition, for two of the three reports, LWC incorrectly issued management decisions letters noting no WIOA affected findings. Each of the noted reports contained one finding affecting the WIOA Cluster programs.
Criteria:
2 CFR 200.332(d) requires that pass-through entities monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
2 CFR 200.332(d)(2) requires that pass-through entities follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients, and 2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the Federal Audit Clearinghouse.
Cause:
LWC policy does not specifically address timeliness requirements for close out letters.
LWC failed to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Effect:
Failure to timely resolve documentation and questioned costs impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor. These risks are also increased by LWC’s failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are reviewed and required management decision letters are issued by the deadlines established by federal regulations.
Recommendation:
LWC management should develop and implement policy ensuring timely close out of monitoring reviews. LWC should also implement adequate internal controls to ensure that it identifies and follows up on subrecipients’ audit findings as specified and issues required management decision letters by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-46).
2023-013 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Year: 2023
Award Number: AA385322255A22
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the WIOA Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the FFATA Subaward Reporting System (FSRS) website required for federal subawards by the Federal Funding Accountability and Transparency Act (FFATA).
While the required data elements for LWC’s 15 WIOA subawards submitted to the FSRS website were complete and accurate, the data submissions for the 15 subawards occurred between one and three months after the due date specified by federal regulations. All 15 subawards executed and submitted during state fiscal year 2023 exceeded $30,000 and collectively totaled over $38.7 million.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submissions. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen internal controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2023-014 – Inadequate Controls over and Noncompliance with Wage Rate Requirements
Award Years: 2004, 2009, 2012, 2019, 2021-2023
Award Number: Not Applicable
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Transportation and Development (DOTD) did not adhere to policies designed to ensure compliance with federal wage rate requirements for construction projects funded through the Highway Planning and Construction program. In addition, DOTD did not comply with a portion of the federal wage rate requirements.
Our procedures disclosed the following:
• From a population of 427 federally-funded projects in the construction phase with expenditures during fiscal year 2023, two (4%) of the 56 projects tested in a non-statistical sample had partial estimates approved for payment prior to DOTD reviewing the required weekly certified payrolls from the contractor.
• From a population of 133 federally-funded projects that were completed during fiscal year 2023, three (21%) of the 14 projects tested in a non-statistical sample did not have an adequate review of the site interviews, including two projects that did not have evidence of review on the site interview form, and one project where the site interview form could not be located, resulting in noncompliance with wage rate requirements. In addition, we reviewed three projects in addition to those sampled above and noted one individually important project did not have evidence of review on the site interview form.
Criteria:
The Davis-Bacon Act (40 USC 3141-3147) requires that all laborers and mechanics employed by contractors or subcontractors on construction work performed on federally-funded highway projects with construction contracts in excess of $2,000 must be paid wages at rates not less than those prevailing on the same type of work on similar construction in the immediate locality as determined by the U.S. Department of Labor (23 USC 113). The contractor or subcontractor must submit weekly certified payrolls for each week any covered work is performed [29 CFR 5.5(a)(3)(ii)(A)] and a statement of compliance. Per 29 CFR 5.6(a)(3), employee interviews should also be conducted to ensure that the work performed by construction workers and mechanics is consistent with the corresponding job titles and wages being reported on the certified payrolls.
To ensure compliance with wage rate requirements, DOTD’s policy is to approve payment of the contractors’ partial estimates after all required certified payrolls for the estimate period are submitted to DOTD. In addition, DOTD’s Engineering Directives and Standards Manual (EDSM) requires that a minimum of one site interview per project be conducted by the Project Engineer on all federally-funded projects with a wage decision.
Cause:
Personnel did not adhere to the guidelines set forth in DOTD’s EDSM related to the required interviews and the practice to only approve construction estimates for payment after the submission of certified weekly payrolls by contractors.
Effect:
Failure to follow established internal controls and guidelines set forth in DOTD’s EDSM resulted in noncompliance with department policy and with the federal wage rate requirements; this could potentially result in contractors not paying laborers and mechanics the prevailing wage rates.
Recommendation:
Management should enforce internal controls and the policies established within DOTD’s EDSM to ensure compliance with federal wage rate requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-53).
2023-014 – Inadequate Controls over and Noncompliance with Wage Rate Requirements
Award Years: 2004, 2009, 2012, 2019, 2021-2023
Award Number: Not Applicable
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Transportation and Development (DOTD) did not adhere to policies designed to ensure compliance with federal wage rate requirements for construction projects funded through the Highway Planning and Construction program. In addition, DOTD did not comply with a portion of the federal wage rate requirements.
Our procedures disclosed the following:
• From a population of 427 federally-funded projects in the construction phase with expenditures during fiscal year 2023, two (4%) of the 56 projects tested in a non-statistical sample had partial estimates approved for payment prior to DOTD reviewing the required weekly certified payrolls from the contractor.
• From a population of 133 federally-funded projects that were completed during fiscal year 2023, three (21%) of the 14 projects tested in a non-statistical sample did not have an adequate review of the site interviews, including two projects that did not have evidence of review on the site interview form, and one project where the site interview form could not be located, resulting in noncompliance with wage rate requirements. In addition, we reviewed three projects in addition to those sampled above and noted one individually important project did not have evidence of review on the site interview form.
Criteria:
The Davis-Bacon Act (40 USC 3141-3147) requires that all laborers and mechanics employed by contractors or subcontractors on construction work performed on federally-funded highway projects with construction contracts in excess of $2,000 must be paid wages at rates not less than those prevailing on the same type of work on similar construction in the immediate locality as determined by the U.S. Department of Labor (23 USC 113). The contractor or subcontractor must submit weekly certified payrolls for each week any covered work is performed [29 CFR 5.5(a)(3)(ii)(A)] and a statement of compliance. Per 29 CFR 5.6(a)(3), employee interviews should also be conducted to ensure that the work performed by construction workers and mechanics is consistent with the corresponding job titles and wages being reported on the certified payrolls.
To ensure compliance with wage rate requirements, DOTD’s policy is to approve payment of the contractors’ partial estimates after all required certified payrolls for the estimate period are submitted to DOTD. In addition, DOTD’s Engineering Directives and Standards Manual (EDSM) requires that a minimum of one site interview per project be conducted by the Project Engineer on all federally-funded projects with a wage decision.
Cause:
Personnel did not adhere to the guidelines set forth in DOTD’s EDSM related to the required interviews and the practice to only approve construction estimates for payment after the submission of certified weekly payrolls by contractors.
Effect:
Failure to follow established internal controls and guidelines set forth in DOTD’s EDSM resulted in noncompliance with department policy and with the federal wage rate requirements; this could potentially result in contractors not paying laborers and mechanics the prevailing wage rates.
Recommendation:
Management should enforce internal controls and the policies established within DOTD’s EDSM to ensure compliance with federal wage rate requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-53).
2023-015 – Untimely Submission of Summary of Samples and Test Results Form
Award Years: 2004–2006, 2012–2013, 2015, 2017-2022
Award Numbers: Not Applicable
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DOTD did not have adequate controls in place to ensure the Summary of Samples and Test Results Form (Form 2059), which is part of DOTD’s project close-out documentation, was completed timely for projects of the Highway Planning and Construction program. DOTD’s Construction Contract Administration Manual requires the Summary of Samples and Test Results Form to be submitted with the project close-out documentation. In practice, DOTD requires this form to be submitted within 90 days of final acceptance of the project. The Summary of Samples and Test Results Form is certified by applicable engineers and includes documentation relating to the quality of materials used for the project, including the sampling plans and test results of the materials.
In a non-statistical sample of 16 projects reviewed from a population of 160 projects receiving final acceptance in fiscal year 2023, DOTD did not ensure the Summary of Samples and Test Results Form was completed within 90 days of the project’s final acceptance for nine (56%) of the projects tested.
• For four (25%) of these projects, the form was completed untimely, ranging from 107 to 175 days after final acceptance.
• For five (31%) of these projects, the form was not completed as of November 2023, with final acceptance dates in October 2022, December 2022, March 2023, May 2023, and June 2023.
Criteria:
23 CFR 637.205(a) requires that state transportation departments develop a quality assurance program which will assure that the materials and workmanship incorporated into each federal-aid highway construction project are in conformity with the requirements of the approved plans and specifications.
Cause:
DOTD did not ensure that the district engineers approved and submitted the Summary of Samples and Test Results Form to DOTD Headquarters in a timely manner.
Effect:
Untimely completion of the Summary of Samples and Test Results Form delays validation that the sampling and testing results were in accordance with DOTD’s quality assurance program. The absence of such documentation could result in a lack of support that the quality of materials and workmanship used met the requirements for a federally funded project.
Recommendation:
DOTD should continue tracking projects receiving final acceptance and emphasize the importance of timely submittal of the Summary of Samples and Test Results Form to district engineers. In addition, DOTD may consider alternative methods for district engineers to document their review and approval of the sampling and testing results.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-56).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-018 - Control Weakness over Higher Education Emergency Relief Fund Reporting
Award Year: 2023
Award Numbers: P425E200926, P425F201887, P425J200055
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-015)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
SUBR did not ensure the accuracy of the annual report for the HEERF program, and Southern University Law Center (SULC) did not maintain supporting information for portions of the HEERF program annual report.
Based on our procedures, the following differences were identified:
• The HEERF - Student Aid Portion (84.425E) was fully expended in calendar year 2022. The total of emergency financial aid grants awarded to students included on the 2020, 2021, and 2022 annual reports was $243,869 less than the total amount awarded and drawn down by SUBR.
• There were 15 less SULC graduate students still enrolled at the university than what was reported on the annual report. Also, there were 14 more SULC graduate students that withdrew from the university than what was included on the annual report. These differences persisted in the annual report when categorizing the students as either full-time or part-time, by race/ethnicity, gender, and age. SULC management represented that the enrollment information included in the annual report matched previously prepared support, but management could not provide such support.
Criteria:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18004(e), CRRSAA Section 314(e), and the American Rescue Plan (ARP) Act Section 2003 require an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require.
Cause:
SUBR procedures to prepare the HEERF annual report were not sufficient to ensure the total program award amount and student data were reported accurately. Also, SULC procedures did not ensure certain supporting information used to compile student counts were retained. This is the fourth consecutive year we have reported control weaknesses over HEERF reporting.
Effect:
Failure to maintain adequate controls related to preparing the HEERF annual report and retaining support for certain amounts on the report increases the risk that errors or omissions may occur and remain undetected resulting in noncompliance with federal requirements.
Recommendation:
Management should strengthen its procedures over the preparation of the annual report and retention of supporting documentation to ensure compliance with federal reporting requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-51).
2023-016 – Inadequate Controls over and Noncompliance with Higher Education Emergency Relief Fund Requirements
Award Year: 2023
Award Number: P425F201650
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
Central Louisiana Technical Community College (CLTCC) overdrew $139,483 of Higher Education Emergency Relief Fund (HEERF) grant funds in fiscal year 2023 as a result of incorrectly including the Oakdale campus activity in their calculation of lost revenue for state fiscal year 2023. CLTCC transferred the operations of the Oakdale campus to SOWELA Technical Community College on July 1, 2018. The transfer of the Oakdale campus was not associated with coronavirus, as required by the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) Section 314(c)(1) for HEERF funding.
Criteria:
Per the American Rescue Plan, the same terms and conditions of the CRRSAA apply. Per the CRRSAA Section 314(c)(1), an institution of higher education may use HEERF to defray expenses associated with coronavirus (including lost revenue).
On March 19, 2021, the U.S. Department of Education (USDOE) published a HEERF I, II, and III Lost Revenue Frequently Asked Questions (FAQ) to provide further clarification regarding the calculation of lost revenue. Per the FAQ under Question No. 5, if the lost revenue is directly attributable to a cause other than the COVID-19 pandemic, the institution may not include those lost revenues in its estimation of its lost revenue for the HEERF grant programs.
Cause:
CLTCC did not have adequate controls in place over lost revenue calculations for HEERF funding to ensure compliance with guidance provided by the USDOE.
Effect:
Failure to adequately review and follow federal guidance increases the risk that unallowable costs could be reimbursed by a federal agency.
Recommendation:
Management should ensure adequate controls are in place to ensure compliance with federal regulations and follow guidance provided by the USDOE for the calculation of lost revenues. CLTCC should also revise its lost revenue calculation and return any overdrawn funds to the federal grantor.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2023-017 - Control Weakness over Higher Education Emergency Relief Fund Requirements
Award Year: 2023
Award Number: P425F201887
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-016)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, Southern University at Baton Rouge’s (SUBR) calculation of lost revenue under HEERF had errors. SUBR failed to include one category of revenues, included the incorrect amount for another category of revenues, and improperly included revenues not related to higher education.
Criteria:
Per the American Rescue Plan, the same terms and conditions of the CRRSAA apply. Per the CRRSAA Section 314(c)(1), an institution of higher education may use HEERF to defray expenses associated with coronavirus (including lost revenue).
On March 19, 2021, the USDOE published a HEERF I, II, and III Lost Revenue FAQ to provide further clarification regarding the calculation of lost revenue. Per the FAQ under Question No. 9, an institution’s calculation of lost revenue must be consistent with the cost principles of the Uniform Guidance (2 CFR 200 Subpart E): must be accorded consistent treatment (e.g., if using the institution’s fiscal year as a baseline, the institution must estimate lost revenue over the course of a fiscal year) and be consistent with policies and procedures that apply uniformly to federally-financed and other activities of the institution.
Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Cause:
SUBR did not have an effective review process to ensure the lost revenue calculation was accurate and only included revenues that could be reimbursed by the federal grantor.
Effect:
Failure to adequately review the lost revenue calculations resulted in a net under draw of federal funds and increases the risk that unallowable costs could be reimbursed by the federal agency.
Recommendation:
Management should strengthen its review process to ensure the calculation of lost revenues is accurate and only includes revenues that meet federal program requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2023-018 - Control Weakness over Higher Education Emergency Relief Fund Reporting
Award Year: 2023
Award Numbers: P425E200926, P425F201887, P425J200055
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-015)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
SUBR did not ensure the accuracy of the annual report for the HEERF program, and Southern University Law Center (SULC) did not maintain supporting information for portions of the HEERF program annual report.
Based on our procedures, the following differences were identified:
• The HEERF - Student Aid Portion (84.425E) was fully expended in calendar year 2022. The total of emergency financial aid grants awarded to students included on the 2020, 2021, and 2022 annual reports was $243,869 less than the total amount awarded and drawn down by SUBR.
• There were 15 less SULC graduate students still enrolled at the university than what was reported on the annual report. Also, there were 14 more SULC graduate students that withdrew from the university than what was included on the annual report. These differences persisted in the annual report when categorizing the students as either full-time or part-time, by race/ethnicity, gender, and age. SULC management represented that the enrollment information included in the annual report matched previously prepared support, but management could not provide such support.
Criteria:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18004(e), CRRSAA Section 314(e), and the American Rescue Plan (ARP) Act Section 2003 require an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require.
Cause:
SUBR procedures to prepare the HEERF annual report were not sufficient to ensure the total program award amount and student data were reported accurately. Also, SULC procedures did not ensure certain supporting information used to compile student counts were retained. This is the fourth consecutive year we have reported control weaknesses over HEERF reporting.
Effect:
Failure to maintain adequate controls related to preparing the HEERF annual report and retaining support for certain amounts on the report increases the risk that errors or omissions may occur and remain undetected resulting in noncompliance with federal requirements.
Recommendation:
Management should strengthen its procedures over the preparation of the annual report and retention of supporting documentation to ensure compliance with federal reporting requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-51).
2023-018 - Control Weakness over Higher Education Emergency Relief Fund Reporting
Award Year: 2023
Award Numbers: P425E200926, P425F201887, P425J200055
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-015)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
SUBR did not ensure the accuracy of the annual report for the HEERF program, and Southern University Law Center (SULC) did not maintain supporting information for portions of the HEERF program annual report.
Based on our procedures, the following differences were identified:
• The HEERF - Student Aid Portion (84.425E) was fully expended in calendar year 2022. The total of emergency financial aid grants awarded to students included on the 2020, 2021, and 2022 annual reports was $243,869 less than the total amount awarded and drawn down by SUBR.
• There were 15 less SULC graduate students still enrolled at the university than what was reported on the annual report. Also, there were 14 more SULC graduate students that withdrew from the university than what was included on the annual report. These differences persisted in the annual report when categorizing the students as either full-time or part-time, by race/ethnicity, gender, and age. SULC management represented that the enrollment information included in the annual report matched previously prepared support, but management could not provide such support.
Criteria:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18004(e), CRRSAA Section 314(e), and the American Rescue Plan (ARP) Act Section 2003 require an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require.
Cause:
SUBR procedures to prepare the HEERF annual report were not sufficient to ensure the total program award amount and student data were reported accurately. Also, SULC procedures did not ensure certain supporting information used to compile student counts were retained. This is the fourth consecutive year we have reported control weaknesses over HEERF reporting.
Effect:
Failure to maintain adequate controls related to preparing the HEERF annual report and retaining support for certain amounts on the report increases the risk that errors or omissions may occur and remain undetected resulting in noncompliance with federal requirements.
Recommendation:
Management should strengthen its procedures over the preparation of the annual report and retention of supporting documentation to ensure compliance with federal reporting requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-51).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-005 - Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2021 - 2023
Award Numbers: 226LA324N1099, 226LA324N1199, 226LA325N1050, 226LA325N1150, 226LA344N2020, 226LA375L1603, 226LA400N8903, 236LA324N1099, 236LA324N1199, 236LA325N1050, 236LA325N1150, 236LA344N2020, 236LA375L1603, 236LA400N8903, S425B200042, S425D210003, S425U210003, S425W210019
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2022-014)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive audit, the Department of Education (DOE) did not fully comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements.
Our procedures disclosed the following:
• For the Child Nutrition Cluster and the Child and Adult Care Food Program, DOE overreported subaward amounts in the FFATA Subaward Reporting System (FSRS) by approximately $2.3 billion. For these programs, DOE reported $529,389,579 in expenditures for subawards on the Schedule of Expenditures of Federal Awards for the period of July 1, 2022, through June 30, 2023, but reported $2,831,811,504 in subawards in FSRS for the same period.
• For the Education Stabilization Fund (ESF) program, a test of 473 subawards totaling $293,838,031 related to 20 subawardees showed that DOE reported the incorrect obligation date in FSRS for 28 subawards totaling $966,100.
See Schedule of Findings and Questioned Costs for chart/table
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
This noncompliance occurred due to a weakness in internal controls over FFATA reporting and, as indicated by management, because the report generated from the Child Nutrition Program system that is used to upload data to FSRS each month was programmed to contain cumulative data instead of monthly data.
Effect:
Reporting inaccurate information to FSRS prevents the public from having access to accurate information on how DOE is obligating federal funds.
Recommendation:
While there was significant improvement in reporting for ESF, DOE should continue to strengthen internal controls to ensure accurate information is reported and should correct all amounts and obligation dates that were previously reported incorrectly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-7).
2023-028 - Inadequate Controls over Payroll
Award Year: 2023
Award Numbers: NU62PS924522, NU90TP922016
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2022-004)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, the Louisiana Department of Health, Office of Public Health (OPH) did not ensure payroll expenditures were certified and approved for the Public Health Emergency Preparedness program and the HIV Prevention Activities Health Department Based program. Exceptions for each federal program are as follows:
• For the Public Health Emergency Preparedness program, a non-statistical sample of 60 payroll transactions was tested from a population of 1,553 transactions totaling $4,760,920. One (2%) time statement was not certified by the employee, and four (7%) time statements were not approved by the employees’ supervisors.
• For the HIV Prevention Activities Health Department Based program, a non-statistical sample of 120 payroll transactions was tested from a population of 1,015 transactions totaling $434,661. Two (2%) time statements were not certified by the employees, and three (3%) time statements were not approved by the employees’ supervisors.
Criteria:
2 CFR 200.430(i) states that records must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, the records must comply with the established accounting policies and practices of the non-federal entity.
The Division of Administration Personnel Policy No. 99 requires employees and supervisors to certify and/or approve time statements for accuracy. Timekeepers are responsible for reviewing the LaGov ZP241 eCertification report prior to processing to identify any employees who have not certified their time statements and any supervisors who have not approved their staff’s time statements.
Cause:
OPH lacked sufficient controls to ensure electronic time statements were properly certified and approved in accordance with federal and state regulations.
Effect:
Failure to adequately approve program expenditures increases the risk that unallowable costs could be reimbursed by the federal grantor.
Recommendation:
OPH should ensure employees comply with existing policies and procedures, including properly certifying and approving electronic time statements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-36).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-019 - Noncompliance with and Control Weakness over Social Services Block Grant Activities Allowed or Unallowed
Award Years: 2022, 2023
Award Numbers: 2201LASOSR, 2301LASOSR
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) transferred $16 million of Temporary Assistance for Needy Families (TANF) grant funds to the Social Services Block Grant (SSBG) during fiscal year 2023. As of June 30, 2023, DCFS did not have a formalized process in place to ensure TANF transfers to SSBG were only used for programs or services for children or their families whose income is less than 200 percent of the poverty level.
Criteria:
Per 45 CFR 75.303(a), the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.
Per 42 USC 604(d)(3)(B), all TANF amounts paid to a state that are used to carry out state programs under SSBG shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line.
Cause:
As a result of not having formalized procedures, DCFS utilized the $16 million of TANF funds transferred during fiscal year 2023 on salaries for DCFS caseworkers through its Public Assistance Cost Allocation Plan, which is not an allowed activity.
Effect:
Failure to implement proper controls over managing SSBG expenditures resulted in noncompliance with federal regulations and $16 million in questioned costs.
Recommendation:
While subsequent to June 30, 2023, DCFS developed written policies and procedures; DCFS should ensure the income requirements applicable to the TANF transfers to SSBG are met and funds are used in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-5).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-021 - Inadequate Controls over Billing for Behavioral Health Services
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-025)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LDH, the Managed Care Organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in Medicaid and the Children’s Health Insurance Program (CHIP) were properly billed and that improper encounters were denied. For fiscal year 2023, we identified approximately $16 million in encounters for services between July 1, 2022, and June 30, 2023, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors:
• Providers were paid $11,544,123 for 158,173 encounters that were billed using incorrect procedure and modifier codes.
• Providers were paid $4,459,886 more than indicated on approved fee schedules for 59,902 encounters for behavioral health services.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Although implementation of this protocol began in fiscal year 2023, all quarters were not completed prior to the end of the fiscal year. Auditors also noted that the EQR’s analysis excluded encounters with location modifiers and included providers that were approved to bill in excess of the fee schedule. Finally, the analysis did not appear to evaluate if the rate billed on the encounter matched the education level modifier.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also used this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-21).
2023-022 - Inadequate Controls over Reporting and Other Federal Compliance Requirements for the Medicaid and Children’s Health
Insurance Programs
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirements: Matching, Earmarking, Period of Performance, Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH erroneously double-reported expenditures for the Medicaid program, resulting in questioned costs, and did not complete certain quarterly checklist reviews intended to ensure compliance with the reporting and matching federal compliance requirements for the Medicaid program and the reporting, period of performance, matching, and earmarking federal compliance requirements for the CHIP program.
LDH improperly included the same $16.6 million Medicaid expenditure on both the September 30, 2022, and March 31, 2023, quarterly federal expenditure reports. In addition, LDH did not complete two of the four (50%) quarterly checklist reviews for fiscal year 2023.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. The Medicaid and CHIP programs require quarterly reporting to Centers for Medicare and Medicaid Services (CMS) detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not ensure their controls over federal requirements were completed for every quarter during fiscal year 2023. In addition, LDH did not accurately complete the quarterly reconciliation, which is intended to ensure all items are accurately reported on the quarterly federal expenditure report.
Effect:
Double-reporting expenditures resulted in $14.9 million in federal questioned costs for the year ending June 30, 2023. As a result of not completing quarterly checklist reviews, LDH failed to detect the misreporting of a $1.7 million recoupment of Disproportionate Share Hospital payments on the wrong federal year schedule for the June 30, 2023, quarterly federal expenditure report.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports to ensure federal expenditures are accurately reported and should ensure all quarterly checklist reviews are completed.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-23).
Auditor’s Additional Comments:
Management's response stated, "LDH disagrees that the quarterly checklist is intended to demonstrate compliance with the federal reporting requirements." LDH management previously represented that the quarterly checklist was part of LDH's internal control process to document the preparation and review of the quarterly federal expenditure reports. As stated in the finding, the noncompliance associated with federal reporting requirements occurred because LDH did not ensure their internal controls over federal requirements were completed for every quarter during fiscal year 2023.
2023-024 - Inadequate Internal Controls over Eligibility Determinations
Award Years: 2019 - 2023
Award Numbers: 1905LA5MAP, 2005LA5021, 2005LA5MAP, 2105LA5021, 2105LA5MAP, 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-028)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medicaid and CHIP programs for the state fiscal year ending June 30, 2023.
From a population of 81,874,016 Medicaid Per-Member-Per-Month (PMPM) and fee-for-service (FFS) payments totaling $13.1 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Seventeen (28%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for Medicaid:
• For one payment, LDH personnel did not discontinue coverage on a recipient who moved out of state.
• For one payment, LDH personnel did not perform all required eligibility determinations before enrolling the recipient; therefore, the recipient was invalidly enrolled during fiscal year 2023.
• For one payment, LDH did not perform all required eligibility determinations before transitioning the recipient to another Medicaid Group.
• For 14 payments, renewals were not performed for the recipients during the state fiscal year as required by federal regulations.
In addition, from a population of 6,352,535 CHIP PMPM and FFS payments totaling $527.9 million, a non-statistical sample of 60 CHIP payments was selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Fifteen (25%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for CHIP:
• For one payment, LDH personnel did not discontinue coverage on a recipient that was invalidly enrolled prior to the start of the Public Health Emergency (PHE).
• For one payment, LDH personnel did not discontinue coverage on a recipient who became ineligible during the fiscal year due to enrollment in a separate CHIP program.
• For 13 payments, LDH did not follow policies and procedures regarding documentation of renewals.
Finally, in an audit report issued in August of 2023 by the Louisiana Legislative Auditor’s Performance Audit Services titled Medicaid Residency, it was discovered that LDH failed to discontinue coverage for four Medicaid recipients who moved out of state.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a recipient must meet eligibility factors and the recipient case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
42 CFR 433.400 also states in order to claim the temporary increase in the federal medical assistance percentage, states must maintain the Medicaid enrollment of “validly enrolled beneficiaries” in one of three tiers of coverage. States may terminate individuals not validly enrolled.
Per State Health Official Letter #21-007, the 12-month postpartum continuous eligibility period is not available to beneficiaries enrolled under the unborn child option (separate CHIP program). In addition, per CMS guidance in the planning COVID-19 FAQs, "The requirements in sections 6008(b)(1) and (b)(2) of the Families First Coronavirus Response Act (FFCRA) to maintain eligibility and premiums in the FFCRA do not apply to separate CHIPs."
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid eligibility manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility decisions, including performance of annual renewals, per federal regulations and the Medicaid eligibility manual.
Effect:
Proper eligibility determination and renewals are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $217,026 in federal funds in relation to the Medicaid recipients who moved out of the state or were invalidly enrolled. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Questioned costs totaling $15,249 in federal funds in relation to the two CHIP recipients whose coverage was not discontinued. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Recommendation:
LDH should ensure its employees follow procedures relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-27).
Auditor’s Additional Comments:
LDH noted in its response it did not concur with the errors noted for renewals not performed for both Medicaid and CHIP. LDH stated, “During the PHE, LDH was operating under a March 25, 2020 CMS approved waiver for certain flexibilities in meeting the timeliness of Medicaid renewals. LDH used the flexibility to suspend processing of standard renewals.” While CMS granted flexibilities for completing the renewals at a future date, it did not appear that CMS was granting approval for suspension of renewals. CMS also notified LDH that federal regulation requires the agency to document the reason for the delay in each case record, but there was no evidence of this in the exceptions noted above.
2023-025 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2023. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are to be paid to the MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2022, through June 30, 2023, LDH paid out 31,571 Medicaid program maternity kick payments totaling $385 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 101 kick payments totaling $887,955 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
During the period July 1, 2022, through June 30, 2023, LDH paid out 4,909 CHIP maternity kick payments totaling $55 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified 9 kick payments totaling $79,182 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
Criteria:
Louisiana Administrative Code Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require a triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their annual review process. In previous years, LDH had procedures in place to perform periodic ad hoc reviews of kick payments that were no longer supported by a triggering event due to the original event having been voided by the plan. It was determined that LDH and the Medicaid Fiscal Intermediary have not performed this annual process since December of 2021.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or no longer have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure the Medicaid Fiscal Intermediary is reviewing all maternity kick payments to ensure they are supported with a triggering event. When payments are identified that are no longer supported by satisfactory evidence, LDH should ensure the payments are recouped from the provider.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-30).
Auditor’s Additional Comments:
LDH noted in its response that it disagreed on the number of unsupported kick payments. As noted in the finding, the maternity kick payments did not have a triggering event as of June 30, 2023. The 35 kick payments mentioned in Management’s response had trigger events submitted after June 30, 2023, which is outside the audit period.
2023-026 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-029)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the sixth consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 28,733 providers paid during fiscal year 2023, it was determined that 8,183 (28%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medicaid agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and CHIP fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal was launched in fiscal year 2022, LDH gave providers until December 31, 2022, to enroll. Providers then had their claims denied for dates of service on or after January 1, 2023, if they had not enrolled through the enrollment portal. These deadlines followed LDH’s corrective action plan from fiscal year 2022; however, due to the timing of the deadlines, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2023 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2023-027 - Weakness in Controls over and Noncompliance with Provider Overpayments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-031)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments and, for the second consecutive year, did not provide sufficient appropriate audit evidence of compliance with federal regulations regarding the return of the federal portion of provider overpayments to the CMS in the appropriate quarter. In a non-statistical sample of 60 provider overpayments, LDH only provided supporting documentation for seven. As a result, we did not have the evidence to support whether LDH had correctly identified the date of discovery or properly returned overpayments to CMS.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
Cause:
LDH did not provide proper supporting documentation for the auditor to test federal regulations over provider overpayments. In addition, LDH’s controls were not suitably designed to correctly identify the date of discovery for provider overpayments.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should ensure they are able to provide supporting documentation timely for the amounts reported in the quarterly CMS reports for provider overpayments. In addition, LDH should strengthen internal controls to ensure identification of the correct date of discovery for provider overpayments and compliance with federal regulations regarding the timely return of those overpayments.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-34).
2023-028 - Inadequate Controls over Payroll
Award Year: 2023
Award Numbers: NU62PS924522, NU90TP922016
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2022-004)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, the Louisiana Department of Health, Office of Public Health (OPH) did not ensure payroll expenditures were certified and approved for the Public Health Emergency Preparedness program and the HIV Prevention Activities Health Department Based program. Exceptions for each federal program are as follows:
• For the Public Health Emergency Preparedness program, a non-statistical sample of 60 payroll transactions was tested from a population of 1,553 transactions totaling $4,760,920. One (2%) time statement was not certified by the employee, and four (7%) time statements were not approved by the employees’ supervisors.
• For the HIV Prevention Activities Health Department Based program, a non-statistical sample of 120 payroll transactions was tested from a population of 1,015 transactions totaling $434,661. Two (2%) time statements were not certified by the employees, and three (3%) time statements were not approved by the employees’ supervisors.
Criteria:
2 CFR 200.430(i) states that records must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, the records must comply with the established accounting policies and practices of the non-federal entity.
The Division of Administration Personnel Policy No. 99 requires employees and supervisors to certify and/or approve time statements for accuracy. Timekeepers are responsible for reviewing the LaGov ZP241 eCertification report prior to processing to identify any employees who have not certified their time statements and any supervisors who have not approved their staff’s time statements.
Cause:
OPH lacked sufficient controls to ensure electronic time statements were properly certified and approved in accordance with federal and state regulations.
Effect:
Failure to adequately approve program expenditures increases the risk that unallowable costs could be reimbursed by the federal grantor.
Recommendation:
OPH should ensure employees comply with existing policies and procedures, including properly certifying and approving electronic time statements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-36).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-008 - Noncompliance with Subrecipient Monitoring Requirements
Award Years: 2019, 2020, 2022
Award Numbers: 1903601, 80NSSC21M0333, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636-05
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2022-007)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, UL Lafayette did not adequately monitor subrecipients of the R&D Cluster programs. In a non-statistical sample of seven subawards out of a population of 43 subawards, it was noted that for five (71%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For two (29%) of the subrecipients evaluated, the subaward documents did not contain the assistance listing number and/or the federal award date, as required by federal regulations.
Criteria:
Per 2 CFR 200.332(a)(1)(iv) and (xii), all pass-through entities must ensure that every subaward includes the federal award date; assistance listing numbers and title; the pass-through entity must identify the dollar amount made available under each federal award and the assistance listings number at time of disbursement.
2 CFR 200.332(d)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
Cause:
UL Lafayette did not have controls in place to ensure adequate monitoring of subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that subaward documents contain all required information and that the required financial and performance reports are received and reviewed timely.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-61).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-029 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-034)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LSUHSC-S did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal R&D Cluster awards from a population of 58 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2023. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 24 key personnel assigned to the selected awards.
We noted two of 24 (8%) key personnel had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor, and there was no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(c) states that for non-construction federal awards, recipients must request prior approvals from federal awarding agencies for one or more of the following program or budget-related reasons: (i) change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval); (ii) change in a key person specified in the application or the federal award; (iii) the disengagement from the project for more than three months, or a 25% reduction in time devoted to the project, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising their Time and Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-40).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-029 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-034)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LSUHSC-S did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal R&D Cluster awards from a population of 58 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2023. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 24 key personnel assigned to the selected awards.
We noted two of 24 (8%) key personnel had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor, and there was no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(c) states that for non-construction federal awards, recipients must request prior approvals from federal awarding agencies for one or more of the following program or budget-related reasons: (i) change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval); (ii) change in a key person specified in the application or the federal award; (iii) the disengagement from the project for more than three months, or a 25% reduction in time devoted to the project, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising their Time and Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-40).
2023-006 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2022-005)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, the Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not ensure internal control over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 25 out of 2,401 payroll-adjusting entries affecting R&D, we noted the following:
• Six (24%) adjustments did not have adequate documentation for cost transfers to fully explain how the error occurred and a sufficient explanation to support the correctness of the new charge.
• Nine (36%) adjustments were not completed within 90 days of when the error was discovered.
• One (4%) adjustment added unallowed expenses to a federal award project and is considered questioned costs totaling $2,619.
We also performed an analysis of payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 728 (36%) out of 2,030 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 92 to 467 days after the end of the biannual period.
In addition, in a non-statistical random sample of 57 out of 11,827 expense transactions charged to R&D during the fiscal year ending June 30, 2023, we noted two (6%) of 32 time and effort certifications for salary and related benefit expenses tested were completed 126 to 140 days after the end of the semiannual period.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that significant changes in work activity are identified and entered into the records in a timely manner and the non-federal entity’s system of internal controls includes processes to review after-the-fact charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (5% or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award. These internal controls should be in compliance with guidance in the “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institute of Health (NIH) is the grantor for the majority of LSUHSCS’s R&D grant awards. Per the NIH Grants Policy Statement 7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
2 CFR 200 Subpart E and the terms and conditions of the award establish requirements for non-federal entities receiving federal awards that govern the allowability of costs.
Cause:
LSUHSC-S implemented a revised Personnel Change (PER) form at the beginning of fiscal year 2023, which was designed to include an explanation and justification for any changes in faculty compensation on projects funded by federal awards. The departmental business managers, who are responsible for initiating PER forms, are not providing a full explanation for how errors occurred and the PER forms are not being processed timely. In addition, LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should monitor, investigate, and obtain justification from department personnel for untimely time and effort certifications, untimely adjustments, and lack of supporting documentation for adjustments to enforce established policies.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-43).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).
2023-020 - Inadequate Controls over and Noncompliance with National Correct Coding Initiative Requirements
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-024)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the Louisiana Department of Health (LDH) failed to properly implement and monitor National Correct Coding Initiative Requirements (NCCI) for Medically Unlikely edits (MUE) and Procedure-to-procedure (PTP) edits for the Medical Assistance Program (Medicaid) fee-for-service (FFS) claims. MUE is an edit on claims in which the number of units billed on the claim are more than what is considered necessary/allowed for a particular procedure code and PTP is an edit on claims in which one specific procedure code is not allowed to be billed with a different specific procedure code on the same recipient on the same day by the same provider.
Our testing of NCCI edits included all FFS claims for Durable Medical Equipment (DME), Outpatient Hospital Service (OP), and Practitioner and Ambulatory Surgical Center (PRA) paid in state fiscal year 2023. These claims were subject to two edit types: MUE and PTP.
In a test of 6,240,335 paid claims to determine if the proper NCCI MUE and PTP edits had been implemented, the following was noted:
• 1,588 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI MUE and denied. These NCCI MUE edit errors resulted in questioned costs of $126,549 in federal funds.
• 43 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI PTP edit and denied. These NCCI PTP edit errors resulted in questioned costs of $1,663 in federal funds.
Criteria:
Section 1903(r) of the Social Security Act requires State Medicaid agencies to incorporate NCCI methodologies into State Medicaid programs. Federal regulations and the NCCI Medicaid Technical Guidance Manual contains requirements for implementation of the NCCI methodologies.
Cause:
LDH noted that required NCCI MUE edits were not applied to OP and DME FFS claims due to system constraints for the first three quarters of the fiscal year. In April 2023, LDH implemented the newest version of the clinical editing product ClaimsXten, which now houses all of the required Medicaid NCCI edits. Once implemented, LDH requested the Medicaid Fiscal Intermediary to reprocess all OP and DME claims for fiscal year 2023 in order to identify claims that should have been evaluated by an NCCI edit and denied. The Medicaid Fiscal Intermediary reprocessed all claims as requested, however, they did not recoup the payments associated with the identified claims.
Effect:
Failure to properly implement and enforce all required NCCI edits increases the likelihood that FFS claims, which should be denied, could potentially be paid.
Recommendation:
LDH management should ensure all required NCCI edits are properly applied to FFS claims.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-17).
2023-021 - Inadequate Controls over Billing for Behavioral Health Services
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-025)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LDH, the Managed Care Organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in Medicaid and the Children’s Health Insurance Program (CHIP) were properly billed and that improper encounters were denied. For fiscal year 2023, we identified approximately $16 million in encounters for services between July 1, 2022, and June 30, 2023, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors:
• Providers were paid $11,544,123 for 158,173 encounters that were billed using incorrect procedure and modifier codes.
• Providers were paid $4,459,886 more than indicated on approved fee schedules for 59,902 encounters for behavioral health services.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Although implementation of this protocol began in fiscal year 2023, all quarters were not completed prior to the end of the fiscal year. Auditors also noted that the EQR’s analysis excluded encounters with location modifiers and included providers that were approved to bill in excess of the fee schedule. Finally, the analysis did not appear to evaluate if the rate billed on the encounter matched the education level modifier.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also used this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-21).
2023-022 - Inadequate Controls over Reporting and Other Federal Compliance Requirements for the Medicaid and Children’s Health
Insurance Programs
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirements: Matching, Earmarking, Period of Performance, Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH erroneously double-reported expenditures for the Medicaid program, resulting in questioned costs, and did not complete certain quarterly checklist reviews intended to ensure compliance with the reporting and matching federal compliance requirements for the Medicaid program and the reporting, period of performance, matching, and earmarking federal compliance requirements for the CHIP program.
LDH improperly included the same $16.6 million Medicaid expenditure on both the September 30, 2022, and March 31, 2023, quarterly federal expenditure reports. In addition, LDH did not complete two of the four (50%) quarterly checklist reviews for fiscal year 2023.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. The Medicaid and CHIP programs require quarterly reporting to Centers for Medicare and Medicaid Services (CMS) detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not ensure their controls over federal requirements were completed for every quarter during fiscal year 2023. In addition, LDH did not accurately complete the quarterly reconciliation, which is intended to ensure all items are accurately reported on the quarterly federal expenditure report.
Effect:
Double-reporting expenditures resulted in $14.9 million in federal questioned costs for the year ending June 30, 2023. As a result of not completing quarterly checklist reviews, LDH failed to detect the misreporting of a $1.7 million recoupment of Disproportionate Share Hospital payments on the wrong federal year schedule for the June 30, 2023, quarterly federal expenditure report.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports to ensure federal expenditures are accurately reported and should ensure all quarterly checklist reviews are completed.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-23).
Auditor’s Additional Comments:
Management's response stated, "LDH disagrees that the quarterly checklist is intended to demonstrate compliance with the federal reporting requirements." LDH management previously represented that the quarterly checklist was part of LDH's internal control process to document the preparation and review of the quarterly federal expenditure reports. As stated in the finding, the noncompliance associated with federal reporting requirements occurred because LDH did not ensure their internal controls over federal requirements were completed for every quarter during fiscal year 2023.
2023-023 - Inadequate Controls over Waiver and Support Coordination Service Providers
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH paid Medicaid Home and Community Based Services claims for the New Opportunities Waiver (NOW) for waiver services that were not documented in accordance with established policies. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW waiver services included 1,004 claims paid in fiscal year 2023 totaling $219,057 paid to three providers for 19 recipients. Our test identified errors for 371 claims totaling $21,222 in federal funds, with some claims having multiple errors. The following errors were noted:
• For 349 claims for 18 recipients, the waiver services provider did not provide adequate documentation to support billed services.
• For 55 claims for 18 recipients, the waiver services provider did not provide documentation to support deviations from the approved Plan of Care (POC), where the units of service provided were below the minimum amount required.
In addition to testing NOW waiver services, we also tested claims paid for support coordination services for the 19 waiver recipients tested. In our test of 311 claims paid in fiscal year 2023 totaling $62,667 paid to four support coordination providers for the 19 recipients, the support coordination service provider did not provide adequate documentation to support billed services for 16 claims for five recipients. The federally funded portion of these claims totaled $2,347.
Criteria:
Waiver services are accessed through support coordinators who assist with development and monitoring of the recipient’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the state of Louisiana, and is the basis for federal and state reviews of the program.
The recipients case record is required to include a copy of the approved POC, including any revisions. The POC documents the recipient’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a recipient based on the approved POC. According to the NOW provider manual, an occasional or temporary deviation from a recipient’s scheduled services is acceptable as long as the services altered are recipient-driven, person-centered, and occur within the prior authorization.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
Cause:
The errors noted in testing occurred because LDH failed to ensure that NOW waiver and support coordination providers follow LDH policies related to proper recordkeeping and supporting documentation.
Effect:
Without adequate documentation, a provider cannot substantiate, and auditors cannot verify that the deviations were recipient-driven and person-centered as required.
Without adequate supporting documentation and compliance with LDH established policies, there is reduced assurance that billed services were actually performed, recipients are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $23,569 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies for waiver and support coordination services are enforced, including documentation to support claims and evidence that deviations from the approved POC meet the needs of the recipient. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-25).
Auditor’s Additional Comments:
LDH noted in its response that it did not concur with the determination of inadequate controls and that a combination of factors and not documentation alone must be considered when determining whether billed services were performed. As noted in the finding, LDH’s provider manuals identify the required documentation for billing, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. The errors noted above included one or a combination of these items to be missing for the recipient files tested; therefore, LDH failed to ensure that providers followed LDH policies.
2023-024 - Inadequate Internal Controls over Eligibility Determinations
Award Years: 2019 - 2023
Award Numbers: 1905LA5MAP, 2005LA5021, 2005LA5MAP, 2105LA5021, 2105LA5MAP, 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-028)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medicaid and CHIP programs for the state fiscal year ending June 30, 2023.
From a population of 81,874,016 Medicaid Per-Member-Per-Month (PMPM) and fee-for-service (FFS) payments totaling $13.1 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Seventeen (28%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for Medicaid:
• For one payment, LDH personnel did not discontinue coverage on a recipient who moved out of state.
• For one payment, LDH personnel did not perform all required eligibility determinations before enrolling the recipient; therefore, the recipient was invalidly enrolled during fiscal year 2023.
• For one payment, LDH did not perform all required eligibility determinations before transitioning the recipient to another Medicaid Group.
• For 14 payments, renewals were not performed for the recipients during the state fiscal year as required by federal regulations.
In addition, from a population of 6,352,535 CHIP PMPM and FFS payments totaling $527.9 million, a non-statistical sample of 60 CHIP payments was selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Fifteen (25%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for CHIP:
• For one payment, LDH personnel did not discontinue coverage on a recipient that was invalidly enrolled prior to the start of the Public Health Emergency (PHE).
• For one payment, LDH personnel did not discontinue coverage on a recipient who became ineligible during the fiscal year due to enrollment in a separate CHIP program.
• For 13 payments, LDH did not follow policies and procedures regarding documentation of renewals.
Finally, in an audit report issued in August of 2023 by the Louisiana Legislative Auditor’s Performance Audit Services titled Medicaid Residency, it was discovered that LDH failed to discontinue coverage for four Medicaid recipients who moved out of state.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a recipient must meet eligibility factors and the recipient case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
42 CFR 433.400 also states in order to claim the temporary increase in the federal medical assistance percentage, states must maintain the Medicaid enrollment of “validly enrolled beneficiaries” in one of three tiers of coverage. States may terminate individuals not validly enrolled.
Per State Health Official Letter #21-007, the 12-month postpartum continuous eligibility period is not available to beneficiaries enrolled under the unborn child option (separate CHIP program). In addition, per CMS guidance in the planning COVID-19 FAQs, "The requirements in sections 6008(b)(1) and (b)(2) of the Families First Coronavirus Response Act (FFCRA) to maintain eligibility and premiums in the FFCRA do not apply to separate CHIPs."
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid eligibility manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility decisions, including performance of annual renewals, per federal regulations and the Medicaid eligibility manual.
Effect:
Proper eligibility determination and renewals are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $217,026 in federal funds in relation to the Medicaid recipients who moved out of the state or were invalidly enrolled. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Questioned costs totaling $15,249 in federal funds in relation to the two CHIP recipients whose coverage was not discontinued. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Recommendation:
LDH should ensure its employees follow procedures relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-27).
Auditor’s Additional Comments:
LDH noted in its response it did not concur with the errors noted for renewals not performed for both Medicaid and CHIP. LDH stated, “During the PHE, LDH was operating under a March 25, 2020 CMS approved waiver for certain flexibilities in meeting the timeliness of Medicaid renewals. LDH used the flexibility to suspend processing of standard renewals.” While CMS granted flexibilities for completing the renewals at a future date, it did not appear that CMS was granting approval for suspension of renewals. CMS also notified LDH that federal regulation requires the agency to document the reason for the delay in each case record, but there was no evidence of this in the exceptions noted above.
2023-025 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2023. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are to be paid to the MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2022, through June 30, 2023, LDH paid out 31,571 Medicaid program maternity kick payments totaling $385 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 101 kick payments totaling $887,955 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
During the period July 1, 2022, through June 30, 2023, LDH paid out 4,909 CHIP maternity kick payments totaling $55 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified 9 kick payments totaling $79,182 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
Criteria:
Louisiana Administrative Code Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require a triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their annual review process. In previous years, LDH had procedures in place to perform periodic ad hoc reviews of kick payments that were no longer supported by a triggering event due to the original event having been voided by the plan. It was determined that LDH and the Medicaid Fiscal Intermediary have not performed this annual process since December of 2021.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or no longer have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure the Medicaid Fiscal Intermediary is reviewing all maternity kick payments to ensure they are supported with a triggering event. When payments are identified that are no longer supported by satisfactory evidence, LDH should ensure the payments are recouped from the provider.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-30).
Auditor’s Additional Comments:
LDH noted in its response that it disagreed on the number of unsupported kick payments. As noted in the finding, the maternity kick payments did not have a triggering event as of June 30, 2023. The 35 kick payments mentioned in Management’s response had trigger events submitted after June 30, 2023, which is outside the audit period.
2023-026 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-029)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the sixth consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 28,733 providers paid during fiscal year 2023, it was determined that 8,183 (28%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medicaid agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and CHIP fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal was launched in fiscal year 2022, LDH gave providers until December 31, 2022, to enroll. Providers then had their claims denied for dates of service on or after January 1, 2023, if they had not enrolled through the enrollment portal. These deadlines followed LDH’s corrective action plan from fiscal year 2022; however, due to the timing of the deadlines, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2023 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2023-027 - Weakness in Controls over and Noncompliance with Provider Overpayments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-031)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments and, for the second consecutive year, did not provide sufficient appropriate audit evidence of compliance with federal regulations regarding the return of the federal portion of provider overpayments to the CMS in the appropriate quarter. In a non-statistical sample of 60 provider overpayments, LDH only provided supporting documentation for seven. As a result, we did not have the evidence to support whether LDH had correctly identified the date of discovery or properly returned overpayments to CMS.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
Cause:
LDH did not provide proper supporting documentation for the auditor to test federal regulations over provider overpayments. In addition, LDH’s controls were not suitably designed to correctly identify the date of discovery for provider overpayments.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should ensure they are able to provide supporting documentation timely for the amounts reported in the quarterly CMS reports for provider overpayments. In addition, LDH should strengthen internal controls to ensure identification of the correct date of discovery for provider overpayments and compliance with federal regulations regarding the timely return of those overpayments.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-34).
2023-020 - Inadequate Controls over and Noncompliance with National Correct Coding Initiative Requirements
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-024)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the Louisiana Department of Health (LDH) failed to properly implement and monitor National Correct Coding Initiative Requirements (NCCI) for Medically Unlikely edits (MUE) and Procedure-to-procedure (PTP) edits for the Medical Assistance Program (Medicaid) fee-for-service (FFS) claims. MUE is an edit on claims in which the number of units billed on the claim are more than what is considered necessary/allowed for a particular procedure code and PTP is an edit on claims in which one specific procedure code is not allowed to be billed with a different specific procedure code on the same recipient on the same day by the same provider.
Our testing of NCCI edits included all FFS claims for Durable Medical Equipment (DME), Outpatient Hospital Service (OP), and Practitioner and Ambulatory Surgical Center (PRA) paid in state fiscal year 2023. These claims were subject to two edit types: MUE and PTP.
In a test of 6,240,335 paid claims to determine if the proper NCCI MUE and PTP edits had been implemented, the following was noted:
• 1,588 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI MUE and denied. These NCCI MUE edit errors resulted in questioned costs of $126,549 in federal funds.
• 43 claims for DME, OP, and PRA were paid but should have been evaluated by an NCCI PTP edit and denied. These NCCI PTP edit errors resulted in questioned costs of $1,663 in federal funds.
Criteria:
Section 1903(r) of the Social Security Act requires State Medicaid agencies to incorporate NCCI methodologies into State Medicaid programs. Federal regulations and the NCCI Medicaid Technical Guidance Manual contains requirements for implementation of the NCCI methodologies.
Cause:
LDH noted that required NCCI MUE edits were not applied to OP and DME FFS claims due to system constraints for the first three quarters of the fiscal year. In April 2023, LDH implemented the newest version of the clinical editing product ClaimsXten, which now houses all of the required Medicaid NCCI edits. Once implemented, LDH requested the Medicaid Fiscal Intermediary to reprocess all OP and DME claims for fiscal year 2023 in order to identify claims that should have been evaluated by an NCCI edit and denied. The Medicaid Fiscal Intermediary reprocessed all claims as requested, however, they did not recoup the payments associated with the identified claims.
Effect:
Failure to properly implement and enforce all required NCCI edits increases the likelihood that FFS claims, which should be denied, could potentially be paid.
Recommendation:
LDH management should ensure all required NCCI edits are properly applied to FFS claims.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-17).
2023-021 - Inadequate Controls over Billing for Behavioral Health Services
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2022-025)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fifth consecutive year, LDH, the Managed Care Organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in Medicaid and the Children’s Health Insurance Program (CHIP) were properly billed and that improper encounters were denied. For fiscal year 2023, we identified approximately $16 million in encounters for services between July 1, 2022, and June 30, 2023, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors:
• Providers were paid $11,544,123 for 158,173 encounters that were billed using incorrect procedure and modifier codes.
• Providers were paid $4,459,886 more than indicated on approved fee schedules for 59,902 encounters for behavioral health services.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Although implementation of this protocol began in fiscal year 2023, all quarters were not completed prior to the end of the fiscal year. Auditors also noted that the EQR’s analysis excluded encounters with location modifiers and included providers that were approved to bill in excess of the fee schedule. Finally, the analysis did not appear to evaluate if the rate billed on the encounter matched the education level modifier.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also used this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-21).
2023-022 - Inadequate Controls over Reporting and Other Federal Compliance Requirements for the Medicaid and Children’s Health
Insurance Programs
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirements: Matching, Earmarking, Period of Performance, Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH erroneously double-reported expenditures for the Medicaid program, resulting in questioned costs, and did not complete certain quarterly checklist reviews intended to ensure compliance with the reporting and matching federal compliance requirements for the Medicaid program and the reporting, period of performance, matching, and earmarking federal compliance requirements for the CHIP program.
LDH improperly included the same $16.6 million Medicaid expenditure on both the September 30, 2022, and March 31, 2023, quarterly federal expenditure reports. In addition, LDH did not complete two of the four (50%) quarterly checklist reviews for fiscal year 2023.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. The Medicaid and CHIP programs require quarterly reporting to Centers for Medicare and Medicaid Services (CMS) detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not ensure their controls over federal requirements were completed for every quarter during fiscal year 2023. In addition, LDH did not accurately complete the quarterly reconciliation, which is intended to ensure all items are accurately reported on the quarterly federal expenditure report.
Effect:
Double-reporting expenditures resulted in $14.9 million in federal questioned costs for the year ending June 30, 2023. As a result of not completing quarterly checklist reviews, LDH failed to detect the misreporting of a $1.7 million recoupment of Disproportionate Share Hospital payments on the wrong federal year schedule for the June 30, 2023, quarterly federal expenditure report.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports to ensure federal expenditures are accurately reported and should ensure all quarterly checklist reviews are completed.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-23).
Auditor’s Additional Comments:
Management's response stated, "LDH disagrees that the quarterly checklist is intended to demonstrate compliance with the federal reporting requirements." LDH management previously represented that the quarterly checklist was part of LDH's internal control process to document the preparation and review of the quarterly federal expenditure reports. As stated in the finding, the noncompliance associated with federal reporting requirements occurred because LDH did not ensure their internal controls over federal requirements were completed for every quarter during fiscal year 2023.
2023-023 - Inadequate Controls over Waiver and Support Coordination Service Providers
Award Years: 2022, 2023
Award Numbers: 2205LA5MAP, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH paid Medicaid Home and Community Based Services claims for the New Opportunities Waiver (NOW) for waiver services that were not documented in accordance with established policies. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW waiver services included 1,004 claims paid in fiscal year 2023 totaling $219,057 paid to three providers for 19 recipients. Our test identified errors for 371 claims totaling $21,222 in federal funds, with some claims having multiple errors. The following errors were noted:
• For 349 claims for 18 recipients, the waiver services provider did not provide adequate documentation to support billed services.
• For 55 claims for 18 recipients, the waiver services provider did not provide documentation to support deviations from the approved Plan of Care (POC), where the units of service provided were below the minimum amount required.
In addition to testing NOW waiver services, we also tested claims paid for support coordination services for the 19 waiver recipients tested. In our test of 311 claims paid in fiscal year 2023 totaling $62,667 paid to four support coordination providers for the 19 recipients, the support coordination service provider did not provide adequate documentation to support billed services for 16 claims for five recipients. The federally funded portion of these claims totaled $2,347.
Criteria:
Waiver services are accessed through support coordinators who assist with development and monitoring of the recipient’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the state of Louisiana, and is the basis for federal and state reviews of the program.
The recipients case record is required to include a copy of the approved POC, including any revisions. The POC documents the recipient’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a recipient based on the approved POC. According to the NOW provider manual, an occasional or temporary deviation from a recipient’s scheduled services is acceptable as long as the services altered are recipient-driven, person-centered, and occur within the prior authorization.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
Cause:
The errors noted in testing occurred because LDH failed to ensure that NOW waiver and support coordination providers follow LDH policies related to proper recordkeeping and supporting documentation.
Effect:
Without adequate documentation, a provider cannot substantiate, and auditors cannot verify that the deviations were recipient-driven and person-centered as required.
Without adequate supporting documentation and compliance with LDH established policies, there is reduced assurance that billed services were actually performed, recipients are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $23,569 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies for waiver and support coordination services are enforced, including documentation to support claims and evidence that deviations from the approved POC meet the needs of the recipient. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-25).
Auditor’s Additional Comments:
LDH noted in its response that it did not concur with the determination of inadequate controls and that a combination of factors and not documentation alone must be considered when determining whether billed services were performed. As noted in the finding, LDH’s provider manuals identify the required documentation for billing, which includes an approved POC, time sheets or electronic clock in/out, and progress notes. The errors noted above included one or a combination of these items to be missing for the recipient files tested; therefore, LDH failed to ensure that providers followed LDH policies.
2023-024 - Inadequate Internal Controls over Eligibility Determinations
Award Years: 2019 - 2023
Award Numbers: 1905LA5MAP, 2005LA5021, 2005LA5MAP, 2105LA5021, 2105LA5MAP, 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2022-028)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the fourth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medicaid and CHIP programs for the state fiscal year ending June 30, 2023.
From a population of 81,874,016 Medicaid Per-Member-Per-Month (PMPM) and fee-for-service (FFS) payments totaling $13.1 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Seventeen (28%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for Medicaid:
• For one payment, LDH personnel did not discontinue coverage on a recipient who moved out of state.
• For one payment, LDH personnel did not perform all required eligibility determinations before enrolling the recipient; therefore, the recipient was invalidly enrolled during fiscal year 2023.
• For one payment, LDH did not perform all required eligibility determinations before transitioning the recipient to another Medicaid Group.
• For 14 payments, renewals were not performed for the recipients during the state fiscal year as required by federal regulations.
In addition, from a population of 6,352,535 CHIP PMPM and FFS payments totaling $527.9 million, a non-statistical sample of 60 CHIP payments was selected and the corresponding recipient’s eligibility was tested to ensure compliance with eligibility federal regulations. Fifteen (25%) out of 60 payments tested did not have adequate documentation to support the eligibility determination or redetermination within the recipient’s case record.
The following errors were noted for CHIP:
• For one payment, LDH personnel did not discontinue coverage on a recipient that was invalidly enrolled prior to the start of the Public Health Emergency (PHE).
• For one payment, LDH personnel did not discontinue coverage on a recipient who became ineligible during the fiscal year due to enrollment in a separate CHIP program.
• For 13 payments, LDH did not follow policies and procedures regarding documentation of renewals.
Finally, in an audit report issued in August of 2023 by the Louisiana Legislative Auditor’s Performance Audit Services titled Medicaid Residency, it was discovered that LDH failed to discontinue coverage for four Medicaid recipients who moved out of state.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a recipient must meet eligibility factors and the recipient case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
42 CFR 433.400 also states in order to claim the temporary increase in the federal medical assistance percentage, states must maintain the Medicaid enrollment of “validly enrolled beneficiaries” in one of three tiers of coverage. States may terminate individuals not validly enrolled.
Per State Health Official Letter #21-007, the 12-month postpartum continuous eligibility period is not available to beneficiaries enrolled under the unborn child option (separate CHIP program). In addition, per CMS guidance in the planning COVID-19 FAQs, "The requirements in sections 6008(b)(1) and (b)(2) of the Families First Coronavirus Response Act (FFCRA) to maintain eligibility and premiums in the FFCRA do not apply to separate CHIPs."
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid eligibility manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility decisions, including performance of annual renewals, per federal regulations and the Medicaid eligibility manual.
Effect:
Proper eligibility determination and renewals are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $217,026 in federal funds in relation to the Medicaid recipients who moved out of the state or were invalidly enrolled. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Questioned costs totaling $15,249 in federal funds in relation to the two CHIP recipients whose coverage was not discontinued. We did not note any questioned costs related to the other errors due to certain restrictions on eligibility actions during the PHE.
Recommendation:
LDH should ensure its employees follow procedures relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-27).
Auditor’s Additional Comments:
LDH noted in its response it did not concur with the errors noted for renewals not performed for both Medicaid and CHIP. LDH stated, “During the PHE, LDH was operating under a March 25, 2020 CMS approved waiver for certain flexibilities in meeting the timeliness of Medicaid renewals. LDH used the flexibility to suspend processing of standard renewals.” While CMS granted flexibilities for completing the renewals at a future date, it did not appear that CMS was granting approval for suspension of renewals. CMS also notified LDH that federal regulation requires the agency to document the reason for the delay in each case record, but there was no evidence of this in the exceptions noted above.
2023-025 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2023. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are to be paid to the MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2022, through June 30, 2023, LDH paid out 31,571 Medicaid program maternity kick payments totaling $385 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 101 kick payments totaling $887,955 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
During the period July 1, 2022, through June 30, 2023, LDH paid out 4,909 CHIP maternity kick payments totaling $55 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified 9 kick payments totaling $79,182 in federal funds that were paid to the Healthy Louisiana MCOs with no triggering event as of June 30, 2023.
Criteria:
Louisiana Administrative Code Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require a triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their annual review process. In previous years, LDH had procedures in place to perform periodic ad hoc reviews of kick payments that were no longer supported by a triggering event due to the original event having been voided by the plan. It was determined that LDH and the Medicaid Fiscal Intermediary have not performed this annual process since December of 2021.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or no longer have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure the Medicaid Fiscal Intermediary is reviewing all maternity kick payments to ensure they are supported with a triggering event. When payments are identified that are no longer supported by satisfactory evidence, LDH should ensure the payments are recouped from the provider.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-30).
Auditor’s Additional Comments:
LDH noted in its response that it disagreed on the number of unsupported kick payments. As noted in the finding, the maternity kick payments did not have a triggering event as of June 30, 2023. The 35 kick payments mentioned in Management’s response had trigger events submitted after June 30, 2023, which is outside the audit period.
2023-026 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-029)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the sixth consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 28,733 providers paid during fiscal year 2023, it was determined that 8,183 (28%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medicaid agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and CHIP fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal was launched in fiscal year 2022, LDH gave providers until December 31, 2022, to enroll. Providers then had their claims denied for dates of service on or after January 1, 2023, if they had not enrolled through the enrollment portal. These deadlines followed LDH’s corrective action plan from fiscal year 2022; however, due to the timing of the deadlines, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2023 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2023-027 - Weakness in Controls over and Noncompliance with Provider Overpayments
Award Years: 2022, 2023
Award Numbers: 2205LA5021, 2205LA5MAP, 2305LA5021, 2305LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2022-031)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments and, for the second consecutive year, did not provide sufficient appropriate audit evidence of compliance with federal regulations regarding the return of the federal portion of provider overpayments to the CMS in the appropriate quarter. In a non-statistical sample of 60 provider overpayments, LDH only provided supporting documentation for seven. As a result, we did not have the evidence to support whether LDH had correctly identified the date of discovery or properly returned overpayments to CMS.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
Cause:
LDH did not provide proper supporting documentation for the auditor to test federal regulations over provider overpayments. In addition, LDH’s controls were not suitably designed to correctly identify the date of discovery for provider overpayments.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should ensure they are able to provide supporting documentation timely for the amounts reported in the quarterly CMS reports for provider overpayments. In addition, LDH should strengthen internal controls to ensure identification of the correct date of discovery for provider overpayments and compliance with federal regulations regarding the timely return of those overpayments.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-34).
2023-003 - Control Weakness Related to Cost Allocation Process
Award Years: 2018 - 2023
Award Numbers: 1804LADI00, 1904LADI00, 2004LADI00, 2104LADI00, 2201LACSES, 2201LAFOST, 2201LASOSR, 2204LADI00, 2301LACSES, 2301LAFOST, 2301LASOSR, 2304LADI00, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures were properly charged and allocated in accordance with the Cost Allocation Plan (CAP), which assigns costs to federal programs.
In a statistical sample of 60 transactions out of a population of 241,344 expenditure transactions totaling $387,232,398 allocated to federal programs, two (3%) transactions had the following errors:
• For one transaction, the supporting documentation was for a prior fiscal year, which resulted in incorrect percentages being charged to various cost pools affecting non-major federal programs. This error resulted in overbilling the Social Services Block Grant (SSBG) by $10,749 and underbilling Foster Care Title IV-E by $35,357. The amount overbilled to SSBG represents questioned costs.
• For one transaction, the cost pool was not included in the CAP in error, and the amendment to the CAP was not submitted timely.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Per 45 CFR 95.509(a)(1) and (4), the state shall promptly amend the cost allocation plan and submit the amended plan to the Director, Division of Cost Allocation, if the following events occur: (1) The procedures shown in the existing cost allocation plan become outdated because of organizational changes, changes in federal law or regulations, or significant changes in program levels, affecting the validity of the approved cost allocation procedures. (4) Other changes occur which make the allocation basis or procedures in the approval cost allocation plan invalid.
Cause:
These errors occurred because there was not an effective review process in place and because the department did not ensure the timely correction of errors to the CAP.
Effect:
Failure to adequately review cost allocation supporting documentation and to ensure that changes are made to the cost allocation plan timely increases the risk that unallowable costs could be charged to federal programs.
Recommendation:
Management should strengthen internal controls over the review process and update the cost allocation plan for cost pool noted.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2023-004 – Improper Employee Activity in Federal Programs
Award Years: 2020 - 2023
Award Numbers: Various
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS’s Fraud and Recovery Unit identified possible improper activity by two employees who appear to have violated department policy as well as state law related to payroll.
Two employees suspected of department policy violations are as follows:
• One former employee received wages from DCFS and another employer for some of the same hours worked during the period June 2020 through April 2023, resulting in a loss of $875 impacting various federal programs. The employee was terminated in September 2023.
• One former employee is suspected to have received wages from DCFS and another employer for some of the same hours worked during the period January 2023 through June 2023, resulting in a possible loss of $15,474 impacting various federal programs. The employee resigned in September 2023 before DCFS informed the employee of the suspected violations.
Criteria:
DCFS Policy 4-2 states that Civil Service Rule 15.2 requires certification of payroll and attendance records by both an employee and his/her appointing authority or designee of hours actually worked and leave taken during a payroll period.
Cause:
The employees did not adhere to department policy.
Effect:
Amounts not recouped by DCFS as of June 30, 2023, totaled $16,349 and represent questioned costs.
Recommendation:
Management should continue to investigate improper employee activities and emphasize the criminal consequences of such activities.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2023-030 - Weakness in Controls over Payroll
Award Years: 2022, 2023
Award Numbers: 2204LADI00, 2304LADI00
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
DCFS did not follow established payroll policies and procedures for the certification and approval of time statements, as well as for the approval of leave requests. This is the second consecutive year a weakness in controls over payroll has been reported. In our review of 45 time statements department-wide for the period July 1, 2022, through June 30, 2023, we identified the following:
• Ten (22%) time statements were approved by supervisors between 1 and 252 days after the date required by policy.
• Three (7%) time statements were certified by employees between 20 and 70 days after the date required by policy.
• Two (4%) time statements were not certified by employees nor approved by the supervisors prior to payroll processing.
In addition, our review of payroll system reports identified 8,133 (5%) of 156,777 leave requests that were auto-approved by the system. This occurs when leave has been requested, but the employee’s supervisor did not take timely action to approve/reject the system leave request before the end of the pay period in which the leave was taken. All open leave requests in the system will be auto-approved on the last day of the applicable pay period in order for the employee to receive payment.
We also performed procedures specifically on the Disability Insurance/SSI Cluster, a major federal program for fiscal year 2023. In a statistical sample of 40 payroll transactions from a population of 46,568 Disability Insurance/SSI Cluster payroll transactions totaling $19,646,061, three (8%) of the time statements tested were not approved by the employees’ supervisors.
Criteria:
DCFS payroll policy requires employees to certify their time statements by the Tuesday following the close of the pay period in the Cross-Application Time Statements (CATS) system, and supervisors are required to approve time statements in the CATS system by the Wednesday following the close of the pay period. Supervisors are also responsible for approving or rejecting all leave requests before the end of the applicable pay period. Also, 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Cause:
DCFS employees did not adhere to the established policies and procedures over payroll to certify and approve time statements in a timely manner or properly approve leave requests.
Effect:
As a result, there is an increased risk that errors and/or fraud could occur and not be detected in a timely manner and that unallowable costs could be reimbursed by the federal grantor.
Recommendation:
Management should ensure employees comply with existing policies and procedures, including certifying and approving time statements and leave requests in a timely manner.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-6).
2023-031 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
Award Years: 2020 - 2022
Award Numbers: EMT-2020-FM-053, EMT-2020-FM-E004, EMT-2021-FM-024, EMT-2021-FM-E001, EMT-2022-FM-E001
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table
Condition:
The Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) did not comply with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for the Flood Mitigation Assistance program. As of June 30, 2023, GOHSEP had not entered subaward information into the FFATA Subaward Reporting System (FSRS) for any of the 50 subawards of $30,000 or more totaling $125,920,379, related to five separate federal awards.
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS no later than the end of the month following the month in which the obligation was made.
Cause:
GOHSEP management indicated that the noncompliance occurred due to having limited access to the FSRS to enter the awards meeting the requirement.
Effect:
Not reporting obligating actions to FSRS prevents the public from having access to accurate information on how GOHSEP is obligating federal funds.
Recommendation:
GOHSEP should strengthen internal controls to ensure that appropriate personnel have the necessary access to FSRS and are timely entering the required award information for FFATA reporting in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-15).
2023-007 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
Award Years: 2018, 2020, 2021, 2022
Award Numbers: 1815976, 2033380, 2117785, 2120015, 2000629518, 22-PA-11080600-187, 5U19AI142636-05, 75N93020D00008/75N93020F00004, DE-AC07-05ID14517, DE-SC0019956, EMW-2021-SS-00019-S01, NA20OAR4310253C
Compliance Requirements: Allowable Costs/Cost Principles, Special Tests and Provisions
Pass-Through Entities: Battelle Energy Alliance, Norwich Technologies Inc., University Corporation for Atmospheric Research
Repeat Finding: Yes (Prior Year Finding No. 2022-006)
See Schedule of Findings and Questioned Costs for chart/table
Condition:
For the third consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal R&D awards accurately reflected work performed.
From a population of 28,301 payroll and non-payroll expenses charged to R&D grants for the fiscal year ended June 30, 2023, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For five (20%) of the transactions, UL Lafayette was unable to provide documentation to show that personnel related expenses totaling $612 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
We reviewed 15 grant awards corresponding to the expense transactions selected and evaluated documentation to support the level of effort for each award and the 20 key personnel assigned to the selected awards. For 13 (65%) of the key personnel, UL Lafayette was unable to provide documentation that the key personnel complied with the effort required by the grant award.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action plan and in a draft effort reporting policy that certifications for employees charging time to federal awards would be required quarterly. For the fiscal year ended June 30, 2023, certifications were only requested in July 2023, after the fiscal year-end, and were required to be returned within 30 days. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, management should revise the Time and Effort Certification policy or implement alternative controls designed to ensure compliance with special tests and provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-59).