Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-009 Prior Year Finding: No Federal Agency: Department of Defense State Agency: Military Department Federal Program: Military Construction, National Guard Assistance Listing Number: 12.400 Award Number and Year: W912LN-20-2-2102 (FY2020) W912LN-21-2-2101 (FY2021) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The National Guard Bureau (NGB) Cooperative Agreement program operates on the basis that the grantee expends State government funds first and then submits request (vouchers) for reimbursement from NGB for allowable Cooperative Agreement (CA) costs. All approved CA agreement payments (to include Advances) made to the grantee by NGB are reimbursable payments. To process reimbursement payments the grantee shall provide an OMB Standard Form (SF) 271 - Outlay Report and Request for Reimbursement for Construction Programs with supporting documentation to the CA Program Manager. The supporting documentation will itemize the amount of funds expended and the corresponding grantee accounting classification to be reimbursed. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Numerous reporting errors were noted on SF-271 reimbursement reports submitted by the Military Department (Department) for the Warfare School and Bennington projects. The amounts reported by cost category did not match supporting documentation and it was determined that budget amounts were reported as current expenditures instead of actual costs incurred to-date. Although individual line items were reported incorrectly, the total federal share requested was calculated correctly based on actual costs incurred to-date and reimbursements did not exceed the federal share of expenditures incurred. Context: Three monthly reports were reviewed for the Warfare School and two monthly reports were reviewed for Bennington. The following exceptions were noted: Warfare School ? 9/30/2021: 5 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. ? 11/30/2021: 5 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. ? 3/31/2022: 4 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. Bennington ? 11/30/2021: 3 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. ? 3/31/2022: 3 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. Questioned costs: None noted. The Federal share requested was calculated correctly based on costs incurred to-date. Cause: The Department?s procedures were not sufficient to ensure the SF-271 ? Outlay Report and Request for Reimbursement for Construction Programs reports were submitted accurately. Internal controls did not prevent or detect the errors. Effect: Reporting the budget amount instead of actual costs incurred on detail report lines results in an overstatement of project costs incurred as of the report date. Further, reporting errors could result in an incorrect calculation of the Federal share requested for reimbursement. Recommendation: We recommend the Department enhance its SF-271 policies and procedures to verify that detail line items agree with supporting documentation. The Department should also improve its internal controls to ensure that SF-271 reports have been prepared accurately prior to submission and that the Federal share of reimbursement requests are calculated correctly. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-010 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: Agency of Commerce and Community Development Federal Program: Community Development Block Grant Assistance Listing Number: 14.228 Award Number and Year: B-20-DW-50-0001 (2020) B-20-DC-50-0001 (2020) B-21-DC-50-0001 (2021) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR ?200.332 - Requirements for Pass-Through Entities states, in part, that all pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501 Audit requirements. Control: Per 2 CFR Section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The State of Vermont Agency of Commerce and Community Development was not able to provide support that it ensured its subrecipients were audited as required by 2 CFR Part 200 Subpart F ? Audit Requirements (Subpart F). Context: Exceptions were noted in three of eight subrecipients selected for testing: ? For three of eight subrecipients, the Agency was unable to provide support that it ensured the subrecipients were audited as required by Subpart F. Questioned costs: Undetermined. Cause: The Agency did not establish effective internal controls and procedures over subrecipient monitoring to ensure that it issued and monitored subawards in accordance with 2 CFR section 200.332. Effect: Failure to ensure subrecipients have obtained audits as required by Subpart F increases the risk that subrecipients may inappropriately spend and/or inaccurately track and report federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, or corrected on a timely basis. Questioned costs: Undetermined Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that an evaluation of independent audits is performed. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-011 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: Agency of Commerce and Community Development Federal Program: Community Development Block Grant Assistance Listing Number: 14.228 Award Number and Year: B-20-DW-50-0001 (2020) B-20-DC-50-0001 (2020) B-21-DC-50-0001 (2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Commerce and Community Development was not in compliance with FSRS reporting requirements. Various subawards and subaward modifications were not reported to FSRS or inaccurately reported key data elements. Context: Three of eight subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 1 of 8 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 1 of 8 subawards were issued amendments to the original subaward, but the amendments were not reported accurately. ? 1 of 8 subawards reported the incorrect subaward obligation/action date (key data element). Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely and accurately to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-012 Prior Year Finding: 2021-009 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI326301955A50 (5/20/2021 ? 12/31/2021) UI340892055A50 (10/1/2019 ? 12/31/2022) UI345252060A50 (1/1/2020 ? 9/30/2022) UI347462055A50 (4/1/2021 ? 6/30/2024) UI356792155A50 (10/1/2020 ? 12/31/2023) UI357352155A50 (10/1/2020 ? 9/30/2021) UI359762160A50 (1/1/2021 ? 9/30/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) UI373112255A50 (10/1/2021 ? 9/30/2022) UI380102260A50 (1/1/2022 ? 9/30/2022) CARES Act PL 116-136 (3/13/2020 ? 9/6/2021) Compliance Requirement: Reporting Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: ETA 191, Financial Status of UCFE/UCX (OMB No. 1205-0162) ? Quarterly report on UCFE and UCX expenditures and the total amount of benefits paid to claimants of specific federal agencies (ET Handbook 401). Per federal regulations, the ETA 191 should be submitted electronically to the National Office by the 25th of the month following the close of the quarter. ETA 2112, UI Financial Transaction Summary (OMB No. 1205-0154) ? A monthly summary of transactions, which account for all funds received in, passed through, or paid out of the state unemployment fund (ET Handbook 401). Per federal regulations, the ETA 2112 should be submitted electronically to the National Office by the 1st day of the second month following the close of the reporting month. ETA 9130, Financial Status Report, UI Programs ? All ETA grantees are required to submit quarterly financial reports for each grant award which they operate, including standard program and pilot, demonstration, and evaluation projects. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. A separate ETA 9130 is submitted for each of the following: UI, PEUC, and PUA Administration, DUA, TRA/RTAA, and UA Projects (administration and benefits). ETA 9050, Time Lapse of All First Payments except Workshare ? The ETA 9050 report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. That data addressed first payment time lapse for total unemployment only. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9052, Nonmonetary Determination Time Lapse Detection - The ETA 9052 report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Note: Overpayment notices on uncontested earnings detected by any method (e.g., crossmatch) should not be included. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9055, Appeals Case Aging - The ETA 9055 report gathers monthly information on the inventory of lower authority and higher authority single claimant appeals cases that have been filed but not decided. Appeals case aging provides information about the number of days from the date an appeal was filed through the end of the month covered by the report. Also included are the average and median ages of the pending single claimant appeals cases. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 2208A, Quarterly UI Above-Base Report - The ETA 2208A is a quarterly report of staff years worked and paid by program category. Reports are submitted electronically to the National Office by the 30th of the month following the close of the quarter. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department was not able to provide support that it had submitted required financial and performance reports by the due dates nor that reports had been reviewed and approved by an authorized State official prior to submission. Questioned costs: Undetermined. Context: We reviewed a sample of the ETA 191, ETA 2112 and ETA 9130 financial reports, a sample of the ETA 9050, ETA 9052 and ETA 9055 performance reports, and a sample of ETA 2208A special reports filed during FY 2022. The following exceptions were noted: ETA 191: 2 of 2 quarterly reports reviewed were submitted after the required due date. Reports for the quarters ending 9/30/2021 and 3/31/2022 were both submitted 23 days late. In addition, support could not be provided to document that the reports had been reviewed and approved prior to submission. ETA 2112: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date. ETA 9130: Reports for the 9/30/2021 and 3/31/2022 quarters were reviewed which included 11 individual grant reports for each quarter, or 22 reports in total. 1 of 11 grant reports for the 9/30/2021 quarter was submitted after the due date. The report was due on 11/14/2021 but was submitted on 11/17/2021, or 3 days late. ETA 9050: Support could not be provided that 4 of 4 reports reviewed had been reviewed and approved prior to submission. ETA 9052: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 9055: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 2208A: 2 of 2 quarterly reports reviewed were submitted after the required due date. The report for the quarter ending 9/30/2021 was due by 10/30/2021 but was submitted on 11/10/2021, or 11 days late. The report for the quarter ending 3/31/2022 was due 4/30/2022 but was submitted on 6/17/2022, or 48 days late. Cause: The Department does not have sufficient internal controls in place over compliance with Unemployment Insurance reporting requirements to ensure that reports are submitted timely and that they are reviewed and approved prior to submission. Effect: Financial, performance and special reports were consistently submitted late. A lack of review and approval of financial and performance reports could allow incorrect data to be reported for the program which could misrepresent the State?s financial and programmatic performance in the program. Recommendation: We recommend that policies and procedures be implemented to ensure that all financial, performance, and special reports are filed timely and accurately and that reports are reviewed and approved by an authorized State official prior to submission. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-013 Prior Year Finding: 2021-012 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: CARES Act PL 116-136 (3/27/2020 ? 9/6/2021) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance ? State Workforce Agencies (SWA) responsibilities include: (1) establishing specific, detailed policies and operating procedures which comply with the requirements of federal laws and regulations; (2) determining the state UI tax structure; (3) collecting state UI contributions from employers (commonly called ?unemployment taxes?); (4) determining claimant eligibility and disqualification provisions; (5) making payment of UI benefits to claimants; (6) managing the program?s revenue and benefit administrative functions; (7) administering the programs in accordance with established policies and procedures; and (8) enacting state UC law that conforms with federal UC law. UIPL No. 16-20 ? The Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020, included the Continued Assistance for Unemployed Workers Act of 2020 (Continued Assistance Act) in Division N, Title II, Subtitle A. The Continued Assistance Act extended the PUA program and enacted several program integrity measures, including a requirement that all individuals receiving a PUA payment on or after December 27, 2020, submit documentation substantiating employment, self-employment, or the planned commencement of employment or self-employment. The PUA program ended September 6, 2021. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Regular Unemployment Insurance program is administered by the Department of Labor (Department) and gives financial aid to unemployed individuals. In 2020, the federal government created new temporary unemployment insurance programs, including the Pandemic Unemployment Assistance (PUA) program, the Pandemic Emergency Unemployment Insurance (PEUC), and the Federal Pandemic Unemployment Compensation (FPUC) program, to further help individuals who lost their jobs due to COVID-19. The COVID-19 pandemic significantly increased the unemployment rate nationally and in Vermont. Before the pandemic, the national unemployment rate was about 4% in January 2020 and about 3% in Vermont. By April 2020, the national unemployment rate, and the Vermont rate both increased to about 15%. While the State?s unemployment rate declined to 2.2% percent in June 2022, the estimated unsupported claims and payments from these programs were significant to the State. Questioned costs: Undetermined. Context: Tests of effectiveness over controls surrounding PUA claims identified that thirty-eight (38) out of thirty-eight (38) PUA claims samples tested had no evidence of review nor timely review of wage support. Cause: The Department was unable to respond in a timely and effective manner to address the significant increase in claims and federal funds that continued throughout fiscal year 2022. Effect: The Department paid a significant amount of unsupported claims through the unemployment insurance program as a result of the COVID-19 pandemic. Claims were paid without the required wage support documentation and without review by the Department as required by USDOL. Recommendation: We recommend the State and the Department perform a thorough risk assessment over the unemployment insurance program and design controls and processes to address identified risks. Seeking continuous improvement to its risk assessment and internal processes is key to strengthening governance, risk management, internal controls, program management and overall operations within the program. Views of responsible officials: The Department acknowledges and accepts this finding, and as this is a repeat finding from last year?s ACFR audit, the Department maintains the same response and corrective action plan. The Pandemic Unemployment Assistance (PUA) program did not exist prior to the COVID-19 global health pandemic. Unlike the unemployment insurance program, which has been in existence since 1935, the PUA program did not have the inherent checks and balances built into the system to ensure proper program administration. Instead, state workforce agencies were expected to build the PUA program from the ground up with little guidance from the USDOL all the while managing through a pandemic that caused unprecedented upheaval in the employment status of millions of citizens. It is accurate that the Vermont Department of Labor was not able to implement the necessary checks and balances into the PUA program to ensure proper program eligibility. As has been pointed out in the audit finding, it was not until nine months after the start of the PUA program that Congress passed legislation that required documentation to be provided to substantiate program eligibility. At that time, due to the significant and unprecedented strains on the Department of Labor?s resources, the newly established documentation requirements were not able to be implemented prior to the end of the PUA program. The Department acknowledges that the lack of the ability to review claimant financial eligibility may have resulted in improper payments. It is important to point out that UIPL 16-20, Change 4 was issued on January 8, 2021, providing no time for UI programs to implement the required changes while still continuing to provide vital economic assistance to tens of thousands of individuals. The only other recourse available to the Department at that time would have been to stop program payments from issuing until the new eligibility requirements were reviewed. This would have left claimants without benefits for months while the Department used our limited financial and staff resources to implement the necessary changes. This is the result of the continuously changing eligibility requirements built from hastily implemented legislation and program design. In calendar year 2022, the Department began the process of retroactively reviewing all PUA claims that were filed and paid after the date of UIPL 16-20, Change 4 to ensure that proper documentation was provided to ensure program eligibility. Where appropriate, claims are being placed into an overpayment status and collection efforts will ensue.
Reference Number: 2022-014 Prior Year Finding: 2021-010 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: State UC, UCFE, and UCX (7/1/2021 ? 6/31/2022) Compliance Requirement: Special Tests and Provisions: UI Benefit Payments Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance ? The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL?s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is excepted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. The "year" includes all batches of weeks ending in the calendar year. Completion of Paid Claims Cases: ? a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; ? 95 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Completion of Denied Claims Cases: ? a minimum of 60 percent of cases must be completed within 60 days of the week ending date of the batch; ? 85 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the Calendar Year. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department of Labor (Department) did not complete BAM case investigations within the time limits established in ET Handbook No. 395. Questioned costs: Undetermined. Context: Forty cases were selected for testing, of which 18 were Paid Claims and 22 were Denied Claims. We noted the following exceptions: ? The Department did not meet the required time limits for closing Paid Claims cases within 90 days. We noted that 83% of cases tested were closed within 90 days which is less than the required 95%. ? 2 of 40 cases were missing documentation of supervisory review and approval. Cause: The Department?s procedures were not sufficient to ensure that BAM case investigations were completed within the time limits required by the program and that documentation was maintained. Internal controls did not prevent or detect the errors. Effect: Noncompliance with BAM case investigation time limits and documentation requirements could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend that the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely, and that documentation of supervisory review and approval is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-015 Prior Year Finding: 2021-011 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI345252060A50 (1/1/2020 ? 9/30/2022) UI359762160A50 (1/1/2021 ? 9/30/2023) UI380102260A50 (1/1/2022 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: The UI program serves as one of the principal ?gateways? to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI?s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA?s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 13-21 provides RESEA operating Guidance for FY 2021. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Questioned costs: Undetermined. Context: Sixty cases were selected for testing and the following exceptions were noted: ? 5 of 60 samples selected were missing the Eligibility Review Questionnaire form and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing a copy of the JobLink status and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing documentation of adjudication. Cause: The Department?s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant?s eligibility and supervisory review, it is possible that ineligible participants could receive benefits from the program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant?s eligibility and review by a UI supervisor. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-016 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) charged costs to the program that were issued without documentation of supervisory review and approval. Questioned costs: None noted. The costs were determined to be allowable. Context: For five of forty general disbursement transactions selected for testing, the Department was unable to provide documentation of supervisory review and approval prior to issuance of payment to the vendor. Cause: The Department?s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Internal controls did not prevent or detect the errors. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the Department reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-017 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Period of Performance Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Costs were incurred and charged to the federal grant prior to the allowable start of the period of performance. Questioned costs: Below the reportable limit. Context: One of forty transactions was charged to the award before the allowable period of performance. The grant award start date was 10/1/2021 but a transaction dated 8/31/2021 in the amount of $7,421 was charged to the award. Cause: The Department of Labor?s (Department?s) procedures were not sufficient to ensure that expenditures charged to the program were incurred within the award?s period of performance. Internal controls did not prevent or detect the error. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award?s allowable period of performance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-012 Prior Year Finding: 2021-009 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI326301955A50 (5/20/2021 ? 12/31/2021) UI340892055A50 (10/1/2019 ? 12/31/2022) UI345252060A50 (1/1/2020 ? 9/30/2022) UI347462055A50 (4/1/2021 ? 6/30/2024) UI356792155A50 (10/1/2020 ? 12/31/2023) UI357352155A50 (10/1/2020 ? 9/30/2021) UI359762160A50 (1/1/2021 ? 9/30/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) UI373112255A50 (10/1/2021 ? 9/30/2022) UI380102260A50 (1/1/2022 ? 9/30/2022) CARES Act PL 116-136 (3/13/2020 ? 9/6/2021) Compliance Requirement: Reporting Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: ETA 191, Financial Status of UCFE/UCX (OMB No. 1205-0162) ? Quarterly report on UCFE and UCX expenditures and the total amount of benefits paid to claimants of specific federal agencies (ET Handbook 401). Per federal regulations, the ETA 191 should be submitted electronically to the National Office by the 25th of the month following the close of the quarter. ETA 2112, UI Financial Transaction Summary (OMB No. 1205-0154) ? A monthly summary of transactions, which account for all funds received in, passed through, or paid out of the state unemployment fund (ET Handbook 401). Per federal regulations, the ETA 2112 should be submitted electronically to the National Office by the 1st day of the second month following the close of the reporting month. ETA 9130, Financial Status Report, UI Programs ? All ETA grantees are required to submit quarterly financial reports for each grant award which they operate, including standard program and pilot, demonstration, and evaluation projects. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. A separate ETA 9130 is submitted for each of the following: UI, PEUC, and PUA Administration, DUA, TRA/RTAA, and UA Projects (administration and benefits). ETA 9050, Time Lapse of All First Payments except Workshare ? The ETA 9050 report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. That data addressed first payment time lapse for total unemployment only. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9052, Nonmonetary Determination Time Lapse Detection - The ETA 9052 report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Note: Overpayment notices on uncontested earnings detected by any method (e.g., crossmatch) should not be included. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9055, Appeals Case Aging - The ETA 9055 report gathers monthly information on the inventory of lower authority and higher authority single claimant appeals cases that have been filed but not decided. Appeals case aging provides information about the number of days from the date an appeal was filed through the end of the month covered by the report. Also included are the average and median ages of the pending single claimant appeals cases. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 2208A, Quarterly UI Above-Base Report - The ETA 2208A is a quarterly report of staff years worked and paid by program category. Reports are submitted electronically to the National Office by the 30th of the month following the close of the quarter. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department was not able to provide support that it had submitted required financial and performance reports by the due dates nor that reports had been reviewed and approved by an authorized State official prior to submission. Questioned costs: Undetermined. Context: We reviewed a sample of the ETA 191, ETA 2112 and ETA 9130 financial reports, a sample of the ETA 9050, ETA 9052 and ETA 9055 performance reports, and a sample of ETA 2208A special reports filed during FY 2022. The following exceptions were noted: ETA 191: 2 of 2 quarterly reports reviewed were submitted after the required due date. Reports for the quarters ending 9/30/2021 and 3/31/2022 were both submitted 23 days late. In addition, support could not be provided to document that the reports had been reviewed and approved prior to submission. ETA 2112: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date. ETA 9130: Reports for the 9/30/2021 and 3/31/2022 quarters were reviewed which included 11 individual grant reports for each quarter, or 22 reports in total. 1 of 11 grant reports for the 9/30/2021 quarter was submitted after the due date. The report was due on 11/14/2021 but was submitted on 11/17/2021, or 3 days late. ETA 9050: Support could not be provided that 4 of 4 reports reviewed had been reviewed and approved prior to submission. ETA 9052: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 9055: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 2208A: 2 of 2 quarterly reports reviewed were submitted after the required due date. The report for the quarter ending 9/30/2021 was due by 10/30/2021 but was submitted on 11/10/2021, or 11 days late. The report for the quarter ending 3/31/2022 was due 4/30/2022 but was submitted on 6/17/2022, or 48 days late. Cause: The Department does not have sufficient internal controls in place over compliance with Unemployment Insurance reporting requirements to ensure that reports are submitted timely and that they are reviewed and approved prior to submission. Effect: Financial, performance and special reports were consistently submitted late. A lack of review and approval of financial and performance reports could allow incorrect data to be reported for the program which could misrepresent the State?s financial and programmatic performance in the program. Recommendation: We recommend that policies and procedures be implemented to ensure that all financial, performance, and special reports are filed timely and accurately and that reports are reviewed and approved by an authorized State official prior to submission. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-013 Prior Year Finding: 2021-012 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: CARES Act PL 116-136 (3/27/2020 ? 9/6/2021) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance ? State Workforce Agencies (SWA) responsibilities include: (1) establishing specific, detailed policies and operating procedures which comply with the requirements of federal laws and regulations; (2) determining the state UI tax structure; (3) collecting state UI contributions from employers (commonly called ?unemployment taxes?); (4) determining claimant eligibility and disqualification provisions; (5) making payment of UI benefits to claimants; (6) managing the program?s revenue and benefit administrative functions; (7) administering the programs in accordance with established policies and procedures; and (8) enacting state UC law that conforms with federal UC law. UIPL No. 16-20 ? The Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020, included the Continued Assistance for Unemployed Workers Act of 2020 (Continued Assistance Act) in Division N, Title II, Subtitle A. The Continued Assistance Act extended the PUA program and enacted several program integrity measures, including a requirement that all individuals receiving a PUA payment on or after December 27, 2020, submit documentation substantiating employment, self-employment, or the planned commencement of employment or self-employment. The PUA program ended September 6, 2021. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Regular Unemployment Insurance program is administered by the Department of Labor (Department) and gives financial aid to unemployed individuals. In 2020, the federal government created new temporary unemployment insurance programs, including the Pandemic Unemployment Assistance (PUA) program, the Pandemic Emergency Unemployment Insurance (PEUC), and the Federal Pandemic Unemployment Compensation (FPUC) program, to further help individuals who lost their jobs due to COVID-19. The COVID-19 pandemic significantly increased the unemployment rate nationally and in Vermont. Before the pandemic, the national unemployment rate was about 4% in January 2020 and about 3% in Vermont. By April 2020, the national unemployment rate, and the Vermont rate both increased to about 15%. While the State?s unemployment rate declined to 2.2% percent in June 2022, the estimated unsupported claims and payments from these programs were significant to the State. Questioned costs: Undetermined. Context: Tests of effectiveness over controls surrounding PUA claims identified that thirty-eight (38) out of thirty-eight (38) PUA claims samples tested had no evidence of review nor timely review of wage support. Cause: The Department was unable to respond in a timely and effective manner to address the significant increase in claims and federal funds that continued throughout fiscal year 2022. Effect: The Department paid a significant amount of unsupported claims through the unemployment insurance program as a result of the COVID-19 pandemic. Claims were paid without the required wage support documentation and without review by the Department as required by USDOL. Recommendation: We recommend the State and the Department perform a thorough risk assessment over the unemployment insurance program and design controls and processes to address identified risks. Seeking continuous improvement to its risk assessment and internal processes is key to strengthening governance, risk management, internal controls, program management and overall operations within the program. Views of responsible officials: The Department acknowledges and accepts this finding, and as this is a repeat finding from last year?s ACFR audit, the Department maintains the same response and corrective action plan. The Pandemic Unemployment Assistance (PUA) program did not exist prior to the COVID-19 global health pandemic. Unlike the unemployment insurance program, which has been in existence since 1935, the PUA program did not have the inherent checks and balances built into the system to ensure proper program administration. Instead, state workforce agencies were expected to build the PUA program from the ground up with little guidance from the USDOL all the while managing through a pandemic that caused unprecedented upheaval in the employment status of millions of citizens. It is accurate that the Vermont Department of Labor was not able to implement the necessary checks and balances into the PUA program to ensure proper program eligibility. As has been pointed out in the audit finding, it was not until nine months after the start of the PUA program that Congress passed legislation that required documentation to be provided to substantiate program eligibility. At that time, due to the significant and unprecedented strains on the Department of Labor?s resources, the newly established documentation requirements were not able to be implemented prior to the end of the PUA program. The Department acknowledges that the lack of the ability to review claimant financial eligibility may have resulted in improper payments. It is important to point out that UIPL 16-20, Change 4 was issued on January 8, 2021, providing no time for UI programs to implement the required changes while still continuing to provide vital economic assistance to tens of thousands of individuals. The only other recourse available to the Department at that time would have been to stop program payments from issuing until the new eligibility requirements were reviewed. This would have left claimants without benefits for months while the Department used our limited financial and staff resources to implement the necessary changes. This is the result of the continuously changing eligibility requirements built from hastily implemented legislation and program design. In calendar year 2022, the Department began the process of retroactively reviewing all PUA claims that were filed and paid after the date of UIPL 16-20, Change 4 to ensure that proper documentation was provided to ensure program eligibility. Where appropriate, claims are being placed into an overpayment status and collection efforts will ensue.
Reference Number: 2022-014 Prior Year Finding: 2021-010 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: State UC, UCFE, and UCX (7/1/2021 ? 6/31/2022) Compliance Requirement: Special Tests and Provisions: UI Benefit Payments Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance ? The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL?s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is excepted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. The "year" includes all batches of weeks ending in the calendar year. Completion of Paid Claims Cases: ? a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; ? 95 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Completion of Denied Claims Cases: ? a minimum of 60 percent of cases must be completed within 60 days of the week ending date of the batch; ? 85 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the Calendar Year. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department of Labor (Department) did not complete BAM case investigations within the time limits established in ET Handbook No. 395. Questioned costs: Undetermined. Context: Forty cases were selected for testing, of which 18 were Paid Claims and 22 were Denied Claims. We noted the following exceptions: ? The Department did not meet the required time limits for closing Paid Claims cases within 90 days. We noted that 83% of cases tested were closed within 90 days which is less than the required 95%. ? 2 of 40 cases were missing documentation of supervisory review and approval. Cause: The Department?s procedures were not sufficient to ensure that BAM case investigations were completed within the time limits required by the program and that documentation was maintained. Internal controls did not prevent or detect the errors. Effect: Noncompliance with BAM case investigation time limits and documentation requirements could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend that the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely, and that documentation of supervisory review and approval is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-015 Prior Year Finding: 2021-011 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI345252060A50 (1/1/2020 ? 9/30/2022) UI359762160A50 (1/1/2021 ? 9/30/2023) UI380102260A50 (1/1/2022 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: The UI program serves as one of the principal ?gateways? to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI?s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA?s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 13-21 provides RESEA operating Guidance for FY 2021. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Questioned costs: Undetermined. Context: Sixty cases were selected for testing and the following exceptions were noted: ? 5 of 60 samples selected were missing the Eligibility Review Questionnaire form and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing a copy of the JobLink status and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing documentation of adjudication. Cause: The Department?s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant?s eligibility and supervisory review, it is possible that ineligible participants could receive benefits from the program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant?s eligibility and review by a UI supervisor. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-016 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) charged costs to the program that were issued without documentation of supervisory review and approval. Questioned costs: None noted. The costs were determined to be allowable. Context: For five of forty general disbursement transactions selected for testing, the Department was unable to provide documentation of supervisory review and approval prior to issuance of payment to the vendor. Cause: The Department?s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Internal controls did not prevent or detect the errors. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the Department reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-017 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Period of Performance Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Costs were incurred and charged to the federal grant prior to the allowable start of the period of performance. Questioned costs: Below the reportable limit. Context: One of forty transactions was charged to the award before the allowable period of performance. The grant award start date was 10/1/2021 but a transaction dated 8/31/2021 in the amount of $7,421 was charged to the award. Cause: The Department of Labor?s (Department?s) procedures were not sufficient to ensure that expenditures charged to the program were incurred within the award?s period of performance. Internal controls did not prevent or detect the error. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award?s allowable period of performance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-018 Prior Year Finding: 2021-013 Federal Agency: Department of the Treasury State Agency: Department of Finance and Management (Finance) Federal Program: COVID-19 ? Coronavirus Relief Fund COVID-19 ? Emergency Rental Assistance COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019, 21.023, 21.027 Award Number and Year: SLT0049 (2020), SLT0083 (2020) ERA0029 (2021), ERAE0054 (2021), ERAE1023 (2021) SLFRP4407 (2021), SLFRP4563 (2021), SLFRP4453 (2021-2022) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. The schedule must also include the total amount provided to subrecipients from each Federal program. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors, including errors in both total expenditures and the amount provided to subrecipients. Context: The following SEFA reporting errors were noted during audit test work: 1. The amount provided to subrecipients under assistance listing 21.023 ? Emergency Rental Assistance was understated by $118.8 million, or 99%. The amount originally reported was $1.3 million but during audit test work it was determined that this amount should have been $120.1 million. 2. The amount provided to subrecipients under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds was understated by $77.3 million, or 89%. The amount originally reported was $9.7 million but during audit test work it was determined that this amount should have been $87 million. 3. Total expenditures reported under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds were overstated by $6.2 million, or 6%. The amount originally reported was $107.8 million but during audit test work it was determined that this amount should have been $101.6 million. The original reported amount included duplicate expenditures of approximately $6 million. 4. The amount provided to subrecipients under assistance listing 21.019 ? Coronavirus Relief Fund could not be verified. During the prior year?s audit, significant reporting errors were noted in the amount provided to subrecipients. During the current year?s audit, Finance indicated that it had not yet fully implemented the FY 2021 corrective action plan for this issue and, as a result, it was unable to verify the accuracy of the amount reported as provided to subrecipients during FY 2022. Questioned costs: Undetermined. Cause: Individual State agencies/departments prepare their own sections of the SEFA and submit them to Finance which compiles the State?s consolidated report. Procedures and internal controls were not sufficient to ensure that expenditures reported by Finance on the SEFA were accurate and were supported by detail expenditure transactions recorded in the State?s accounting system. On the initial SEFA submitted to auditors, approximately $6 million had been duplicated in total expenditures under 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Payments to subrecipients under Emergency Rental Assistance and Coronavirus State and Local Fiscal Recovery Funds were improperly coded in the State?s accounting system which caused them to be excluded when the SEFA was initially prepared. Further, the prior year?s corrective action plan had not been fully implemented to allow Finance to verify the accuracy of the amount reported as provided to subrecipients under the Coronavirus Relief Fund during FY 2022. Effect: The amount provided to subrecipients was incorrectly reported on the SEFA submitted to auditors which effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that Finance improve its SEFA compilation process to ensure that program expenditures and the amounts provided to subrecipients reported on the State?s SEFA are complete and accurate. We further recommend that Finance work with the State?s agencies and departments to review and enhance procedures and controls to ensure that subrecipient payments are accurately recorded in the State?s accounting system and that expenditure information submitted to Finance for inclusion on the State?s SEFA is accurate and ties to detail expenditure transactions in the State?s accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-019 Prior Year Finding: No Federal Agency: Department of the Treasury State Agency: Agency of Commerce and Community Development Federal Program: COVID-19 ? Homeowner Assistance Fund Assistance Listing Number: 21.026 Award Number and Year: HAF0030 (5/3/2021 ? 9/30/2026) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.305(b)(9), interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Per the U.S. Treasury?s Homeowner Assistance Fund (HAF) Frequently Asked Questions on Reporting Requirements, Question 1.15, in accordance with 2 CFR 200.305(b)(9)(ii), HAF participants may retain up to $500 in earned interest annually. Any additional interest must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: HAF Program funds transferred to the Agency of Commerce and Community Development (Agency) by the U.S. Treasury were deposited into an interest-bearing account, but interest earned over $500 per year was not remitted to the Department of Health and Human Services Payment Management System as required. Context: The Agency received two deposits from the U.S. Treasury for the program, $5,000,000 received on 8/27/2021 and $45,000,000 received on 2/1/2022 after approval of the HAF Plan. Funds were deposited into an interest-bearing account, but interest earned on HAF funds was not calculated. As a result of the audit, the Vermont State Treasurer?s Office calculated interest earned for the program during calendar year 2021 and calendar year 2022. Total interest earned in excess of $500 per year is $2,165 for 2021 and $325,564 for 2022. Cause: The Agency did not develop sufficient procedures and internal controls to calculate interest earned on program funds and was unaware that it had earned interest in excess of $500 per year which should have been remitted to the Department of Health and Human Services. Effect: The State of Vermont retained interest earned on program funds and did not remit earnings over $500 per year to the Department of Health and Human Services as required. Questioned costs: Undetermined. Recommendation: We recommend the Agency work with U.S. Treasury officials regarding resolution of this matter. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-018 Prior Year Finding: 2021-013 Federal Agency: Department of the Treasury State Agency: Department of Finance and Management (Finance) Federal Program: COVID-19 ? Coronavirus Relief Fund COVID-19 ? Emergency Rental Assistance COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019, 21.023, 21.027 Award Number and Year: SLT0049 (2020), SLT0083 (2020) ERA0029 (2021), ERAE0054 (2021), ERAE1023 (2021) SLFRP4407 (2021), SLFRP4563 (2021), SLFRP4453 (2021-2022) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. The schedule must also include the total amount provided to subrecipients from each Federal program. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors, including errors in both total expenditures and the amount provided to subrecipients. Context: The following SEFA reporting errors were noted during audit test work: 1. The amount provided to subrecipients under assistance listing 21.023 ? Emergency Rental Assistance was understated by $118.8 million, or 99%. The amount originally reported was $1.3 million but during audit test work it was determined that this amount should have been $120.1 million. 2. The amount provided to subrecipients under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds was understated by $77.3 million, or 89%. The amount originally reported was $9.7 million but during audit test work it was determined that this amount should have been $87 million. 3. Total expenditures reported under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds were overstated by $6.2 million, or 6%. The amount originally reported was $107.8 million but during audit test work it was determined that this amount should have been $101.6 million. The original reported amount included duplicate expenditures of approximately $6 million. 4. The amount provided to subrecipients under assistance listing 21.019 ? Coronavirus Relief Fund could not be verified. During the prior year?s audit, significant reporting errors were noted in the amount provided to subrecipients. During the current year?s audit, Finance indicated that it had not yet fully implemented the FY 2021 corrective action plan for this issue and, as a result, it was unable to verify the accuracy of the amount reported as provided to subrecipients during FY 2022. Questioned costs: Undetermined. Cause: Individual State agencies/departments prepare their own sections of the SEFA and submit them to Finance which compiles the State?s consolidated report. Procedures and internal controls were not sufficient to ensure that expenditures reported by Finance on the SEFA were accurate and were supported by detail expenditure transactions recorded in the State?s accounting system. On the initial SEFA submitted to auditors, approximately $6 million had been duplicated in total expenditures under 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Payments to subrecipients under Emergency Rental Assistance and Coronavirus State and Local Fiscal Recovery Funds were improperly coded in the State?s accounting system which caused them to be excluded when the SEFA was initially prepared. Further, the prior year?s corrective action plan had not been fully implemented to allow Finance to verify the accuracy of the amount reported as provided to subrecipients under the Coronavirus Relief Fund during FY 2022. Effect: The amount provided to subrecipients was incorrectly reported on the SEFA submitted to auditors which effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that Finance improve its SEFA compilation process to ensure that program expenditures and the amounts provided to subrecipients reported on the State?s SEFA are complete and accurate. We further recommend that Finance work with the State?s agencies and departments to review and enhance procedures and controls to ensure that subrecipient payments are accurately recorded in the State?s accounting system and that expenditure information submitted to Finance for inclusion on the State?s SEFA is accurate and ties to detail expenditure transactions in the State?s accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-020 Prior Year Finding: No Federal Agency: Department of the Treasury State Agency: Agency of Administration Federal Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: SLFRP4407 (3/1/2021 ? 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Payments to subrecipients were incorrectly recorded in the Agency of Administration?s (Agency?s) accounting system as payments for Unemployment Compensation. Context: Sixty payroll related expenditures were selected for testing, including two payments recorded as Unemployment Compensation. The two unemployment compensation payments were determined to be payments to subrecipients and were not payroll related. Although the payments, totaling $652,937, were incorrectly charged as Unemployment Compensation in the Agency?s accounting system, the costs were allowable subrecipient costs. Cause: The Agency?s procedures and controls were not sufficient to ensure that payments were properly recorded in the accounting system. Data entry errors occurred when the accounts payable transactions were recorded for payment and supervisory review and approval of the transactions did not detect the errors. Effect: Program expenditures were improperly recorded in the Agency?s accounting system. Failure to accurately record payments in the accounting system could lead to reporting errors, including incorrectly reporting payments to subrecipients. Questioned costs: None noted. Although the payments had been miscoded in the accounting system, the payments were allowable subrecipient costs. Recommendation: We recommend the Agency review and enhance procedures and internal controls to ensure that accounts payable transactions are properly recorded. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-021 Prior Year Finding: No Federal Agency: Department of the Treasury State Agency: Agency of Administration Federal Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: SLFRP4407 (3/1/2021 ? 12/31/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR ?200.332 - Requirements for Pass-Through Entities states, in part, that all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1)(iii) Federal Award Identification Number (FAIN); Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Required federal award information was omitted from a subaward issued from the program. Context: The Agency of Administration (Agency) has oversight responsibility for Coronavirus State and Local Fiscal Recovery Funds expenditures and reporting for the State of Vermont (the State). Multiple agencies and departments within the State incur costs and issue subawards charged to the program. Twelve subrecipients were selected for testing and the Department of Public Service (Department) issued a subaward to 1 of the 12 subrecipients. The Federal Award Identification Number (FAIN) was not included on this subaward. Cause: The Department did not establish effective internal controls and procedures over subrecipient monitoring. It was unable to ensure that it provided all required information to its subrecipients upon award issuance. The Agency?s oversight of the program did not detect the error. Effect: Excluding the required federal grant award information at the time of subaward issuance may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports. Questioned costs: Undetermined. Recommendation: We recommend the Agency work with the Department to review and enhance internal controls and procedures to ensure that all required federal award information is included in subawards. We further recommend that the Agency review its oversight procedures and controls to ensure that all State agencies and departments that issue subawards under the program are in compliance with federal requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-022 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Award Number and Year: S010A200045 (7/1/2020 ? 9/30/2021) S01A210045 (7/1/2021-9/30/2022) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of U.S. Department of Education funds use the G5 system to simultaneously request cash reimbursements and report expenditures. The G5 system is in lieu of the SF-270 ? Request for Advance or Reimbursement. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had reported for drawdown in the G5 system was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA). The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had reported and drawn down in the G5 system for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted the total reported draws were $5.9 million (approximately 16%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draws in the G5 system were complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over financial reporting to ensure that cash draws requested in the G5 system are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-023 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Award Number and Year: S010A200045 (7/1/2020 ? 9/30/2021) S01A210045 (7/1/2021-9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported accurately to FSRS or were not reported timely. Context: Nineteen subawards were selected for testing and many of these subawards were amended several times for a total of sixty transactions tested. Specifically, the following exceptions were noted: ? 9 of 41 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. ? 1 of 41 amendments were not reported to FSRS. ? 1 of 19 original subawards were not reported timely to FSRS. ? 1 of 41 subaward amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-029 Prior Year Finding: 2021-018 Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425U Award Number and Year: S425D210011 (1/5/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported to FSRS or were not reported timely. Context: Ten of thirty-two subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 2 of 32 subawards were not reported to FSRS. ? 5 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 2 of 32 subawards were not reported timely to FSRS. ? 1 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-026 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) Assistance Listing Number: 84.425C, 84.425D Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Participation of Private School Children Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: For programs under ESSER I and GEER I (Assistance Listing 84.425C and D), an LEA that receives funds under one or both of those programs must provide equitable services in the same manner as provided under section 1117 of Title I, Part A of the ESEA (20 USC 6320) (Assistance Listing 84.010) to students and teachers in private schools as determined in consultation with private school officials (section 18005(a) of the CARES Act). To meet this requirement, a Local Education Agency (LEA) must determine the proportional share of ESSER I or GEER I funds available for equitable services in accordance with section 1117(a)(4)(A) of the ESEA (20 USC 6320(a)(4)(A)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support the calculation of Participation of Private School Children set-aside amounts. Context: For 12 of 12 LEAs selected for testing, the Agency was unable to provide support to validate that the set-aside amounts for private school children had been determined appropriately. The total set asides were determined at the school district level and support was maintained at the LEA and not at the non-public (independent) school level. Therefore, auditors could not verify the accuracy of the set-aside calculations. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation supporting private school set-aside calculations. Effect: Auditors were unable to verify that set-aside calculations were accurate and determined properly. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over participation of private school children and that documentation supporting set-aside calculations is maintained and available for auditor review. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-029 Prior Year Finding: 2021-018 Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425U Award Number and Year: S425D210011 (1/5/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported to FSRS or were not reported timely. Context: Ten of thirty-two subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 2 of 32 subawards were not reported to FSRS. ? 5 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 2 of 32 subawards were not reported timely to FSRS. ? 1 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-028 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund Assistance Listing Number: 84.425C, 84.425R Award Number and Year: S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425R210033 (2/23/2021 ? 9/30/2022) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Equipment/Real Property Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. Per 2 CFR section 200.313(d), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was unable to provide supporting documentation for equipment purchased with program funds. The Agency did not maintain an equipment ledger or track equipment in accordance with 2 CFR section 200.313. Context: When auditors conducted an initial risk assessment of the program, the Agency was unable to provide an equipment ledger or other supporting documentation of equipment purchased with program funds and, therefore, materiality could not be determined. The Agency conducted a manual assessment over all personal property/equipment purchased with federal program funding. This assessment determined that approximately $78,000 of equipment was purchased using GEER funding. While this amount is immaterial to total funding dollars, materiality could only be determined due to the additional assessments performed. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation of equipment purchased with program funds. Effect: Equipment purchased with program funds was not managed and accounted for in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over equipment to ensure that it purchases and records equipment purchased with program funds in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-026 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) Assistance Listing Number: 84.425C, 84.425D Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Participation of Private School Children Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: For programs under ESSER I and GEER I (Assistance Listing 84.425C and D), an LEA that receives funds under one or both of those programs must provide equitable services in the same manner as provided under section 1117 of Title I, Part A of the ESEA (20 USC 6320) (Assistance Listing 84.010) to students and teachers in private schools as determined in consultation with private school officials (section 18005(a) of the CARES Act). To meet this requirement, a Local Education Agency (LEA) must determine the proportional share of ESSER I or GEER I funds available for equitable services in accordance with section 1117(a)(4)(A) of the ESEA (20 USC 6320(a)(4)(A)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support the calculation of Participation of Private School Children set-aside amounts. Context: For 12 of 12 LEAs selected for testing, the Agency was unable to provide support to validate that the set-aside amounts for private school children had been determined appropriately. The total set asides were determined at the school district level and support was maintained at the LEA and not at the non-public (independent) school level. Therefore, auditors could not verify the accuracy of the set-aside calculations. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation supporting private school set-aside calculations. Effect: Auditors were unable to verify that set-aside calculations were accurate and determined properly. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over participation of private school children and that documentation supporting set-aside calculations is maintained and available for auditor review. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-028 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund Assistance Listing Number: 84.425C, 84.425R Award Number and Year: S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425R210033 (2/23/2021 ? 9/30/2022) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Equipment/Real Property Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. Per 2 CFR section 200.313(d), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was unable to provide supporting documentation for equipment purchased with program funds. The Agency did not maintain an equipment ledger or track equipment in accordance with 2 CFR section 200.313. Context: When auditors conducted an initial risk assessment of the program, the Agency was unable to provide an equipment ledger or other supporting documentation of equipment purchased with program funds and, therefore, materiality could not be determined. The Agency conducted a manual assessment over all personal property/equipment purchased with federal program funding. This assessment determined that approximately $78,000 of equipment was purchased using GEER funding. While this amount is immaterial to total funding dollars, materiality could only be determined due to the additional assessments performed. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation of equipment purchased with program funds. Effect: Equipment purchased with program funds was not managed and accounted for in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over equipment to ensure that it purchases and records equipment purchased with program funds in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-029 Prior Year Finding: 2021-018 Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425U Award Number and Year: S425D210011 (1/5/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported to FSRS or were not reported timely. Context: Ten of thirty-two subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 2 of 32 subawards were not reported to FSRS. ? 5 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 2 of 32 subawards were not reported timely to FSRS. ? 1 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-030 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Allowable Costs Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.403(a), except where otherwise authorized by statute, in order for a cost to be allowable under Federal awards it must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per 2 CFR section 200.405, a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency included an unallowable cost in an administrative cost pool which was allocated to the program. Context: The Agency?s Department of Health (Department) charged a settlement payment of $3,891.30 related to a Superfund site lawsuit to an administrative cost pool, and a portion of this payment was allocated to the program. The allocated cost was not necessary or reasonable for the performance of the Federal award nor was it assignable in part to the Federal award as a cost necessary to the overall operation of the Department. Cause: The Agency?s internal controls were not operating sufficiently to ensure that costs charged to an administrative cost pool were allowable and allocable per the requirements of 2 CFR sections 200.403 and 200.405. Effect: Unallowable costs were allocated to the program. Questioned costs: Undetermined, due to the distribution of costs through the Department?s approved cost allocation plan. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that costs charged to administrative cost pools are allowable and allocable per 2 CFR sections 200.403 and 200.405. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-031 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted reports after the due date. Context: Five of five subawards selected for testing were not reported timely to FSRS. Four of the five subawards tested were reported between 6 and 68 days late. One of the five subawards tested was issued in March 2022, but was not reported to FSRS until September 2022, or about five months after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. For one of the exceptions noted, the late report was initially caused by a delay in the grantee obtaining a Unique Entity ID (UEI), however, the Agency failed to report the subaward timely after the grantee?s UEI became available. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-030 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Allowable Costs Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.403(a), except where otherwise authorized by statute, in order for a cost to be allowable under Federal awards it must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per 2 CFR section 200.405, a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency included an unallowable cost in an administrative cost pool which was allocated to the program. Context: The Agency?s Department of Health (Department) charged a settlement payment of $3,891.30 related to a Superfund site lawsuit to an administrative cost pool, and a portion of this payment was allocated to the program. The allocated cost was not necessary or reasonable for the performance of the Federal award nor was it assignable in part to the Federal award as a cost necessary to the overall operation of the Department. Cause: The Agency?s internal controls were not operating sufficiently to ensure that costs charged to an administrative cost pool were allowable and allocable per the requirements of 2 CFR sections 200.403 and 200.405. Effect: Unallowable costs were allocated to the program. Questioned costs: Undetermined, due to the distribution of costs through the Department?s approved cost allocation plan. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that costs charged to administrative cost pools are allowable and allocable per 2 CFR sections 200.403 and 200.405. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-031 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted reports after the due date. Context: Five of five subawards selected for testing were not reported timely to FSRS. Four of the five subawards tested were reported between 6 and 68 days late. One of the five subawards tested was issued in March 2022, but was not reported to FSRS until September 2022, or about five months after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. For one of the exceptions noted, the late report was initially caused by a delay in the grantee obtaining a Unique Entity ID (UEI), however, the Agency failed to report the subaward timely after the grantee?s UEI became available. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-032 Prior Year Finding: 2021-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are required to submit quarterly Performance Measure Reports and Financial Reports, no later than 30 days after the end of each quarter, in accordance with the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency did not submit Performance Measure reports in a timely manner and documentation to support both Performance Measures and Financial reports was either missing or did not agree to submitted reports. Context: Performance Measure Reports: Reports for two quarters were selected for testing in which six performance reports were reviewed. Financial Reports: Reports for two quarters were selected for testing in which ten financial reports were reviewed. We noted the following exceptions: ? 2 of 6 Performance Measure Data Reports were not filed in a timely manner. One report was submitted 15 days late and another was submitted 64 days late. ? For 2 of 6 Performance Measure reports, supporting documentation could not be provided. ? For 1 of 10 Financial reports, supporting documentation provided for unliquidated obligations did not agree with the information reported. Support indicated that $7,900 was unliquidated, but the amount reported was $790. Cause: Procedures and controls were insufficient to ensure that supporting documentation was maintained and available for audit and that reports were filed accurately and timely. The reports are filed electronically, and the Agency did not maintain copies of all supporting documentation used to prepare Performance Measure reports. In addition, the Agency made a data entry error on one of the Financial reports and controls did not detect or prevent the error. Effect: Performance measure data reported for the program was untimely and unsupported with adequate documentation. The Agency reported the incorrect value of unliquidated obligations on one Financial report. Questioned costs: Undetermined due to a lack of supporting documentation. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required reports are filed accurately and timely and that supporting documentation is maintained and is available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-033 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted several reports after the due date. Context: Four of five subawards selected for testing were not reported timely to FSRS. The subawards were issued in February 2022 and should have been reported no later than March 31, 2022, but they were all reported on April 22, 2022, which was 22 days after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-032 Prior Year Finding: 2021-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are required to submit quarterly Performance Measure Reports and Financial Reports, no later than 30 days after the end of each quarter, in accordance with the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency did not submit Performance Measure reports in a timely manner and documentation to support both Performance Measures and Financial reports was either missing or did not agree to submitted reports. Context: Performance Measure Reports: Reports for two quarters were selected for testing in which six performance reports were reviewed. Financial Reports: Reports for two quarters were selected for testing in which ten financial reports were reviewed. We noted the following exceptions: ? 2 of 6 Performance Measure Data Reports were not filed in a timely manner. One report was submitted 15 days late and another was submitted 64 days late. ? For 2 of 6 Performance Measure reports, supporting documentation could not be provided. ? For 1 of 10 Financial reports, supporting documentation provided for unliquidated obligations did not agree with the information reported. Support indicated that $7,900 was unliquidated, but the amount reported was $790. Cause: Procedures and controls were insufficient to ensure that supporting documentation was maintained and available for audit and that reports were filed accurately and timely. The reports are filed electronically, and the Agency did not maintain copies of all supporting documentation used to prepare Performance Measure reports. In addition, the Agency made a data entry error on one of the Financial reports and controls did not detect or prevent the error. Effect: Performance measure data reported for the program was untimely and unsupported with adequate documentation. The Agency reported the incorrect value of unliquidated obligations on one Financial report. Questioned costs: Undetermined due to a lack of supporting documentation. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required reports are filed accurately and timely and that supporting documentation is maintained and is available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-033 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted several reports after the due date. Context: Four of five subawards selected for testing were not reported timely to FSRS. The subawards were issued in February 2022 and should have been reported no later than March 31, 2022, but they were all reported on April 22, 2022, which was 22 days after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-034 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Foster Care ? Title IV-E Assistance Listing Number: 93.658 Award Number and Year: 2101VTFOST (10/1/2020 ? 9/30/2021) 2201VTFOST (10/1/2021 ? 9/30/2022) Compliance Requirement: Eligibility Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: A foster care provider, whether a foster family home or a child-care institution must be fully licensed by the proper State or tribal foster care licensing authority responsible for licensing such homes or child care institutions. The term ?child care institution? as defined in 45 CFR section 1355.20 includes a private child care institution, or a public child care institution which accommodates no more than 25 children, which is licensed by the State in which it is situated or has been approved, by the agency of such State responsible for licensing or approval of institutions of this type, as meeting the standards established for such licensing, but does not include detention facilities, forestry camps, training schools, or facilities operated primarily for the purpose of detention of children who are determined to be delinquent (42 USC 671(a)(10) and 672(c)). Effective October 1, 2010, the existing statutory definition of a child care institution includes a supervised setting in which an individual who has attained 18 years of age is living independently, consistent with conditions the Secretary establishes in regulations (42 USC 672(c)(2)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Human Services (Agency) was unable to provide documentation that all providers were fully licensed and determined eligible by the State foster care licensing authority to provide Foster Care services prior to issuance of payment for services provided to the program. Context: Sixty cases were selected for testing and the following exceptions were noted: ? For 2 of 60 cases, the providers were unlicensed at the time payment was made. License packets contain the criminal background and child abuse registry checks, therefore these criteria were unable to be verified. ? For 1 of 60 cases, the Agency was unable to provide documentation that the provider had been determined eligible. The Federal Share paid to the provider was $480. Cause: The Agency did not have sufficient controls in place to ensure that all providers were properly licensed and determined eligible to provide Foster Care services prior to issuance of payment. Effect The Agency made payments to unlicensed providers, and it was unable to provide documentation that another provider was properly licensed and eligible to provide services prior to issuing payments using Foster Care funds. Questioned costs: Below the reportable limit. Recommendation: We recommend the Agency review its procedures and controls over the licensing of providers to ensure that it maintains documentation that all providers are fully licensed and eligible to provide services prior to paying for services using federal Foster Care funds. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-035 Prior Year Finding: 2021-023 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Assistance Listing Number: 93.767 Award Number and Year: 2005VT5021 (10/1/2019 ? 9/30/2021) 2105VT5021 (10/1/2020 ? 9/30/2022) Compliance Requirement: Eligibility Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Eligibility is based on the application of modified adjusted gross income and household definition, in addition to other permissible eligibility standards, for example standards relating to geographic area, age (up to, but not including age 19), and insurance status. States are directed at 42 CFR 457.340(d) to determine eligibility promptly and without undue delay and 42 CFR 435.912(c)(3) states that the determination of eligibility may not exceed 45 days. Over the course of the COVID-19 public health emergency, state Medicaid and CHIP agencies adopted many flexibilities offered by the Centers for Medicare and Medicaid Services (CMS) to respond effectively to local outbreaks, including changes to modify eligibility requirements and benefit packages. States have made policy, programmatic, and systems changes to respond effectively to COVID-19 including satisfying a ?continuous enrollment condition? for most Medicaid and CHIP beneficiaries who were enrolled in the program as of or after March 18, 2020. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Human Services (Agency) did not document that a participant had turned 19 during the year and should be removed from enrollment at the conclusion of the Public Health Emergency (PHE). It also did not complete eligibility determinations in a timely manner. Context: Sixty participants were selected for testing and the following exceptions were noted: ? One of sixty participants selected for testing turned 19 during the fiscal year. Due to the ?continuous enrollment condition? of the PHE, the participant could not be removed from enrollment, but the Agency did not document that the participant should be removed from enrollment at the conclusion of the PHE. ? For one of sixty participants, eligibility determination exceeded 45 days. Cause: The Agency did not adequately follow procedures regarding eligibility in accordance with federal program requirements and internal controls did not detect or prevent the errors. Effect Failure to document that a participant should be removed from enrollment at the conclusion of the PHE could result in an ineligible participant receiving benefits from the program. Failure to complete eligibility determination timely could result in a delay in issuing benefits to participants. Questioned costs: Undetermined. Recommendation: We recommend that the Agency review and enhance procedures and controls for CHIP beneficiary eligibility determination to ensure that eligibility is determined promptly within federal requirements. We further recommend that participants who become ineligible during the PHE are documented in a timely manner to ensure that benefits to ineligible participants are properly terminated at the conclusion of the PHE. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-037 Prior Year Finding: 2021-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: We noted that the Agency did not maintain documentation to support providers? compliance with the prescribed health and safety standards. The Agency requires that providers complete a health and safety agreement in which they attest to compliance with the Agency?s health and safety requirements. The provider eligibility and health and safety requirements are administered by a 3rd-party that is required to determine and document providers? eligibility with the Agency?s requirements in the provider management module (PMM). Health and safety documentation was not consistently maintained in provider files and compliance could not be verified. Context: Of the 60 samples selected for testing, health and safety standards could not be verified for the following: 1. 39 of 60 provider files did not have current license information maintained in the PMM and the monthly screening process was not followed to validate the licenses. 2. One provider file was not available for review. 3. 3 of 60 provider files did not contain documentation that the provider was in good tax standing. Cause: The Agency?s 3rd-Party provider did not consistently maintain current documentation in the provider management module and controls did not detect or prevent the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-038 Prior Year Finding: 2021-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subawards were not reported to FSRS in accordance with FFATA requirements. The following errors were noted: ? Eighteen subawards and subaward amendments were not reported to FSRS. ? Three subawards and subaward amendments were not reported timely. ? One subaward was reported under an incorrect DUNS number. Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty-two subawards, totaling $10,711,156, were selected for testing and the following reporting errors were noted: ? Agency of Human Services Central Office (AHS-CO): Two subawards totaling $558,000 were not reported to FSRS. The subawards were issued on 10/1/2021 but were not reported to FSRS until after auditors selected them for testing. ? Department of Children and Families (DCF): One subaward of $32,284 was not reported timely. The subaward should have been reported no later than 1/31/2022 but it was reported on 2/17/2022, or 17 days late. ? Department of Mental Health (DMH): One subaward of $59,790 was not reported timely. The subaward should have been reported no later than 6/30/2022 but it was reported on 7/19/2022, or 19 days late. Three subaward amendments, totaling $31,475 were not reported to FSRS. ? Department of Aging and Independent Living (DAIL): One subaward of $42,369 was not reported timely. In addition, an amendment for the subaward was not reported. The amount not reported to FSRS was $8,400. ? Department of Vermont Health Access (DVHA): Two subawards totaling $130,231 were not reported to FSRS. One subaward of $38,364 was reported under an incorrect DUNS number. ? Vermont Department of Health (VDH): Eleven subawards totaling $7,416,814 were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward modifications are reported accurately to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-039 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 96.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Medical Loss Ratio (MLR) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: For all contracts, the state must ensure that each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) submits a report with the data elements specified in 42 CFR sections 438.8(k) and 438.8(n). The report should contain the required 13 data elements in the regulation, reflect the correct reporting years, and contain an attestation of accuracy regarding the calculation of the medical loss ratio. Managed care plans are required to submit the annual report in the time and manner established by the state, which must be within 12 months after the end of the MLR reporting year. The state should have a policy and procedure to indicate when the report(s) are due from plans and should not accept multiple submissions from plans unless the capitation payments are revised retroactively. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The 2020 Medical Loss Ratio report for the State?s Prepaid Inpatient Health Plan (PIHP) was not submitted within twelve months after the end of the reporting year. Context: The Agency of Human Services, Department of Vermont Health Access (DVHA) acts as its own PIHP. DVHA was required to submit the PIHP?s Medical Loss Ratio report for the year ending 12/31/2020 no later than 12/31/2021 but the report was not submitted until 2/2/2022. Cause: The Agency did not adequately follow procedures regarding timely submission of the Medical Loss Ratio report for its PIHP. Effect: The Agency is out of compliance with MLR reporting requirements. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and controls regarding Medical Loss Ratio reporting to ensure that reports for its PIHP are submitted timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-037 Prior Year Finding: 2021-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: We noted that the Agency did not maintain documentation to support providers? compliance with the prescribed health and safety standards. The Agency requires that providers complete a health and safety agreement in which they attest to compliance with the Agency?s health and safety requirements. The provider eligibility and health and safety requirements are administered by a 3rd-party that is required to determine and document providers? eligibility with the Agency?s requirements in the provider management module (PMM). Health and safety documentation was not consistently maintained in provider files and compliance could not be verified. Context: Of the 60 samples selected for testing, health and safety standards could not be verified for the following: 1. 39 of 60 provider files did not have current license information maintained in the PMM and the monthly screening process was not followed to validate the licenses. 2. One provider file was not available for review. 3. 3 of 60 provider files did not contain documentation that the provider was in good tax standing. Cause: The Agency?s 3rd-Party provider did not consistently maintain current documentation in the provider management module and controls did not detect or prevent the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-038 Prior Year Finding: 2021-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subawards were not reported to FSRS in accordance with FFATA requirements. The following errors were noted: ? Eighteen subawards and subaward amendments were not reported to FSRS. ? Three subawards and subaward amendments were not reported timely. ? One subaward was reported under an incorrect DUNS number. Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty-two subawards, totaling $10,711,156, were selected for testing and the following reporting errors were noted: ? Agency of Human Services Central Office (AHS-CO): Two subawards totaling $558,000 were not reported to FSRS. The subawards were issued on 10/1/2021 but were not reported to FSRS until after auditors selected them for testing. ? Department of Children and Families (DCF): One subaward of $32,284 was not reported timely. The subaward should have been reported no later than 1/31/2022 but it was reported on 2/17/2022, or 17 days late. ? Department of Mental Health (DMH): One subaward of $59,790 was not reported timely. The subaward should have been reported no later than 6/30/2022 but it was reported on 7/19/2022, or 19 days late. Three subaward amendments, totaling $31,475 were not reported to FSRS. ? Department of Aging and Independent Living (DAIL): One subaward of $42,369 was not reported timely. In addition, an amendment for the subaward was not reported. The amount not reported to FSRS was $8,400. ? Department of Vermont Health Access (DVHA): Two subawards totaling $130,231 were not reported to FSRS. One subaward of $38,364 was reported under an incorrect DUNS number. ? Vermont Department of Health (VDH): Eleven subawards totaling $7,416,814 were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward modifications are reported accurately to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-039 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 96.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Medical Loss Ratio (MLR) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: For all contracts, the state must ensure that each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) submits a report with the data elements specified in 42 CFR sections 438.8(k) and 438.8(n). The report should contain the required 13 data elements in the regulation, reflect the correct reporting years, and contain an attestation of accuracy regarding the calculation of the medical loss ratio. Managed care plans are required to submit the annual report in the time and manner established by the state, which must be within 12 months after the end of the MLR reporting year. The state should have a policy and procedure to indicate when the report(s) are due from plans and should not accept multiple submissions from plans unless the capitation payments are revised retroactively. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The 2020 Medical Loss Ratio report for the State?s Prepaid Inpatient Health Plan (PIHP) was not submitted within twelve months after the end of the reporting year. Context: The Agency of Human Services, Department of Vermont Health Access (DVHA) acts as its own PIHP. DVHA was required to submit the PIHP?s Medical Loss Ratio report for the year ending 12/31/2020 no later than 12/31/2021 but the report was not submitted until 2/2/2022. Cause: The Agency did not adequately follow procedures regarding timely submission of the Medical Loss Ratio report for its PIHP. Effect: The Agency is out of compliance with MLR reporting requirements. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and controls regarding Medical Loss Ratio reporting to ensure that reports for its PIHP are submitted timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-037 Prior Year Finding: 2021-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: We noted that the Agency did not maintain documentation to support providers? compliance with the prescribed health and safety standards. The Agency requires that providers complete a health and safety agreement in which they attest to compliance with the Agency?s health and safety requirements. The provider eligibility and health and safety requirements are administered by a 3rd-party that is required to determine and document providers? eligibility with the Agency?s requirements in the provider management module (PMM). Health and safety documentation was not consistently maintained in provider files and compliance could not be verified. Context: Of the 60 samples selected for testing, health and safety standards could not be verified for the following: 1. 39 of 60 provider files did not have current license information maintained in the PMM and the monthly screening process was not followed to validate the licenses. 2. One provider file was not available for review. 3. 3 of 60 provider files did not contain documentation that the provider was in good tax standing. Cause: The Agency?s 3rd-Party provider did not consistently maintain current documentation in the provider management module and controls did not detect or prevent the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-038 Prior Year Finding: 2021-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subawards were not reported to FSRS in accordance with FFATA requirements. The following errors were noted: ? Eighteen subawards and subaward amendments were not reported to FSRS. ? Three subawards and subaward amendments were not reported timely. ? One subaward was reported under an incorrect DUNS number. Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty-two subawards, totaling $10,711,156, were selected for testing and the following reporting errors were noted: ? Agency of Human Services Central Office (AHS-CO): Two subawards totaling $558,000 were not reported to FSRS. The subawards were issued on 10/1/2021 but were not reported to FSRS until after auditors selected them for testing. ? Department of Children and Families (DCF): One subaward of $32,284 was not reported timely. The subaward should have been reported no later than 1/31/2022 but it was reported on 2/17/2022, or 17 days late. ? Department of Mental Health (DMH): One subaward of $59,790 was not reported timely. The subaward should have been reported no later than 6/30/2022 but it was reported on 7/19/2022, or 19 days late. Three subaward amendments, totaling $31,475 were not reported to FSRS. ? Department of Aging and Independent Living (DAIL): One subaward of $42,369 was not reported timely. In addition, an amendment for the subaward was not reported. The amount not reported to FSRS was $8,400. ? Department of Vermont Health Access (DVHA): Two subawards totaling $130,231 were not reported to FSRS. One subaward of $38,364 was reported under an incorrect DUNS number. ? Vermont Department of Health (VDH): Eleven subawards totaling $7,416,814 were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward modifications are reported accurately to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-039 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 96.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Medical Loss Ratio (MLR) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: For all contracts, the state must ensure that each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) submits a report with the data elements specified in 42 CFR sections 438.8(k) and 438.8(n). The report should contain the required 13 data elements in the regulation, reflect the correct reporting years, and contain an attestation of accuracy regarding the calculation of the medical loss ratio. Managed care plans are required to submit the annual report in the time and manner established by the state, which must be within 12 months after the end of the MLR reporting year. The state should have a policy and procedure to indicate when the report(s) are due from plans and should not accept multiple submissions from plans unless the capitation payments are revised retroactively. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The 2020 Medical Loss Ratio report for the State?s Prepaid Inpatient Health Plan (PIHP) was not submitted within twelve months after the end of the reporting year. Context: The Agency of Human Services, Department of Vermont Health Access (DVHA) acts as its own PIHP. DVHA was required to submit the PIHP?s Medical Loss Ratio report for the year ending 12/31/2020 no later than 12/31/2021 but the report was not submitted until 2/2/2022. Cause: The Agency did not adequately follow procedures regarding timely submission of the Medical Loss Ratio report for its PIHP. Effect: The Agency is out of compliance with MLR reporting requirements. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and controls regarding Medical Loss Ratio reporting to ensure that reports for its PIHP are submitted timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-018 Prior Year Finding: 2021-013 Federal Agency: Department of the Treasury State Agency: Department of Finance and Management (Finance) Federal Program: COVID-19 ? Coronavirus Relief Fund COVID-19 ? Emergency Rental Assistance COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019, 21.023, 21.027 Award Number and Year: SLT0049 (2020), SLT0083 (2020) ERA0029 (2021), ERAE0054 (2021), ERAE1023 (2021) SLFRP4407 (2021), SLFRP4563 (2021), SLFRP4453 (2021-2022) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. The schedule must also include the total amount provided to subrecipients from each Federal program. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors, including errors in both total expenditures and the amount provided to subrecipients. Context: The following SEFA reporting errors were noted during audit test work: 1. The amount provided to subrecipients under assistance listing 21.023 ? Emergency Rental Assistance was understated by $118.8 million, or 99%. The amount originally reported was $1.3 million but during audit test work it was determined that this amount should have been $120.1 million. 2. The amount provided to subrecipients under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds was understated by $77.3 million, or 89%. The amount originally reported was $9.7 million but during audit test work it was determined that this amount should have been $87 million. 3. Total expenditures reported under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds were overstated by $6.2 million, or 6%. The amount originally reported was $107.8 million but during audit test work it was determined that this amount should have been $101.6 million. The original reported amount included duplicate expenditures of approximately $6 million. 4. The amount provided to subrecipients under assistance listing 21.019 ? Coronavirus Relief Fund could not be verified. During the prior year?s audit, significant reporting errors were noted in the amount provided to subrecipients. During the current year?s audit, Finance indicated that it had not yet fully implemented the FY 2021 corrective action plan for this issue and, as a result, it was unable to verify the accuracy of the amount reported as provided to subrecipients during FY 2022. Questioned costs: Undetermined. Cause: Individual State agencies/departments prepare their own sections of the SEFA and submit them to Finance which compiles the State?s consolidated report. Procedures and internal controls were not sufficient to ensure that expenditures reported by Finance on the SEFA were accurate and were supported by detail expenditure transactions recorded in the State?s accounting system. On the initial SEFA submitted to auditors, approximately $6 million had been duplicated in total expenditures under 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Payments to subrecipients under Emergency Rental Assistance and Coronavirus State and Local Fiscal Recovery Funds were improperly coded in the State?s accounting system which caused them to be excluded when the SEFA was initially prepared. Further, the prior year?s corrective action plan had not been fully implemented to allow Finance to verify the accuracy of the amount reported as provided to subrecipients under the Coronavirus Relief Fund during FY 2022. Effect: The amount provided to subrecipients was incorrectly reported on the SEFA submitted to auditors which effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that Finance improve its SEFA compilation process to ensure that program expenditures and the amounts provided to subrecipients reported on the State?s SEFA are complete and accurate. We further recommend that Finance work with the State?s agencies and departments to review and enhance procedures and controls to ensure that subrecipient payments are accurately recorded in the State?s accounting system and that expenditure information submitted to Finance for inclusion on the State?s SEFA is accurate and ties to detail expenditure transactions in the State?s accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward modifications were not reported accurately and/or timely to FSRS. Context: 40 subawards were selected for testing and many of these subawards were amended several times for a total of 370 transactions tested. Specifically, the following exceptions were noted: ? 6 of 40 original subawards were not reported to FSRS. ? 50 of 330 amendments were not reported to FSRS. ? 10 of 40 original subawards were not reported timely to FSRS. ? 35 of 330 subaward amendments were not reported timely to FSRS. ? 1 of 40 subawards reported an incorrect original subaward amount to FSRS. ? 85 of 330 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-007 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Special Tests and Provisions ? Accountability for USDA-Donated Foods Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Distributing and sub distributing agencies (as defined at 7 CFR section 250.3) must maintain accurate and complete records with respect to the receipt, distribution, and inventory of USDA-donated foods, including end products processed from donated foods. Failure to maintain records required by 7 CFR section 250.16 shall be considered prima facie evidence of improper distribution or loss of donated foods, and the agency, processor, or entity may be required to pay USDA the value of the food or replace it in kind (7 CFR sections 250.16(a)(6) and 250.15(c)). Distributing and sub distributing agencies shall take a physical inventory of all storage facilities. Such inventory shall be reconciled annually with the storage facility?s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. Corrective action shall be taken immediately on all deficiencies and inventory discrepancies and the results of the corrective action forwarded to the distributing agency (7 CFR section 250.14(e)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) acts as the State distributing agency for the USDA donated foods. Commodities received by the Agency are ultimately distributed to participating School Food Authorities (SFA) throughout the State of Vermont. Errors were detected in the Agency?s reconciliation process for USDA-Donated Foods. Context: On an annual basis, the Agency enters into a $0 contract with a third-party vendor to warehouse the brown box USDA foods once they are delivered to the State. The third-party vendor utilizes an inventory system, TRACS, to maintain inventory of the commodities in the warehouse and to track the distribution of donated foods to the SFAs. While the quantity of items is maintained in TRACS, the system does not track the value of the commodity items. The value of commodities and the number of commodity items are tracked through the USDA?s Web Based Supply Chain Management (WBSCM) system. Annually, the Agency notifies each SFA of the value of their commodities received. On a quarterly basis, the Agency reconciles commodities recorded in TRACS and WBSCM. Nine school reconciliations, including 58 products, were selected for testing. The following exceptions were noted: ? 31 of 58 products contained variances, but no follow-up on these variances was documented by the Agency. ? 2 of 9 school reconciliations contained an incorrect TRACS amount. ? For 9 of 9 school reconciliations, support could not be provided to demonstrate that the reconciliations performed were complete and accurate. Cause: The Agency?s procedures were not sufficient to ensure that reconciliations of the WBSCM and TRACS systems was performed accurately. Internal controls did not detect or prevent the errors. Effect: The Agency may not be accurately reporting the value of commodities received to the SFAs. In addition, variances may exist between TRACS and WBSCM that may not be identified and counted in a timely manner. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding quarterly WBSCM to TRACS reconciliations to ensure that the reconciliations are complete and accurate. We further recommend that variances identified during the reconciliation process are investigated and corrected timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-008 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Agency of Education (Agency) Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Award Number and Year: 4VT300307 (2020-2022), 4VT310307 (2020-2022), 4VT308907 (2022-2023) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: School Food Authorities (SFAs) and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c)). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) did not retain all supporting documentation for several summary lines of the monthly FNS-10 reports and auditors were unable to verify that the reported amounts were accurate for these rows. Context: Seven reports were filed for the three months which were selected for testing, consisting of 3 FNS-10 reports, 3 FNS-10 SSO reports and 1 FNS-418 report. For 2 of the 3 FNS-10 and FNS-10 SSO reports reviewed, detail supporting documentation provided to auditors for several summary rows did not agree to the amounts reported. Specifically, we noted the following: ? FNS-10 SSO ? August 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 4 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 SSO ? November 2021: For 2 of 3 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. ? FNS-10 ? November 2021: For 2 of 8 categories, detail reconciliations provided to auditors did not agree to the summary rows reported. The Agency acknowledged that it had not retained detail reconciliations at the time of submission, and it provided revised reconciliations to auditors. Upon review, it was determined that several lines of the revised reconciliations did not agree to the submitted reports, therefore, auditors were unable to verify the accuracy of the reports filed for the reports. Cause: The Agency?s procedures were not sufficient to ensure that it retained all required supporting documentation for FNS-10 and FNS-10 SSO reports filed during FY 2022; including retaining copies of reconciliations performed between detail and summary data. Internal controls did not detect or prevent the errors. Effect: Auditors were unable to verify the accuracy of portions of the FNS-10 and FNS-10 SSO reports filed. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and internal controls regarding monthly financial reporting to ensure that all supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-009 Prior Year Finding: No Federal Agency: Department of Defense State Agency: Military Department Federal Program: Military Construction, National Guard Assistance Listing Number: 12.400 Award Number and Year: W912LN-20-2-2102 (FY2020) W912LN-21-2-2101 (FY2021) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The National Guard Bureau (NGB) Cooperative Agreement program operates on the basis that the grantee expends State government funds first and then submits request (vouchers) for reimbursement from NGB for allowable Cooperative Agreement (CA) costs. All approved CA agreement payments (to include Advances) made to the grantee by NGB are reimbursable payments. To process reimbursement payments the grantee shall provide an OMB Standard Form (SF) 271 - Outlay Report and Request for Reimbursement for Construction Programs with supporting documentation to the CA Program Manager. The supporting documentation will itemize the amount of funds expended and the corresponding grantee accounting classification to be reimbursed. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Numerous reporting errors were noted on SF-271 reimbursement reports submitted by the Military Department (Department) for the Warfare School and Bennington projects. The amounts reported by cost category did not match supporting documentation and it was determined that budget amounts were reported as current expenditures instead of actual costs incurred to-date. Although individual line items were reported incorrectly, the total federal share requested was calculated correctly based on actual costs incurred to-date and reimbursements did not exceed the federal share of expenditures incurred. Context: Three monthly reports were reviewed for the Warfare School and two monthly reports were reviewed for Bennington. The following exceptions were noted: Warfare School ? 9/30/2021: 5 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. ? 11/30/2021: 5 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. ? 3/31/2022: 4 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. Bennington ? 11/30/2021: 3 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. ? 3/31/2022: 3 of 9 report detail lines were reported incorrectly, using the budget amount instead of the required total costs to-date. Of the incorrectly reported lines, two were summary calculations. Questioned costs: None noted. The Federal share requested was calculated correctly based on costs incurred to-date. Cause: The Department?s procedures were not sufficient to ensure the SF-271 ? Outlay Report and Request for Reimbursement for Construction Programs reports were submitted accurately. Internal controls did not prevent or detect the errors. Effect: Reporting the budget amount instead of actual costs incurred on detail report lines results in an overstatement of project costs incurred as of the report date. Further, reporting errors could result in an incorrect calculation of the Federal share requested for reimbursement. Recommendation: We recommend the Department enhance its SF-271 policies and procedures to verify that detail line items agree with supporting documentation. The Department should also improve its internal controls to ensure that SF-271 reports have been prepared accurately prior to submission and that the Federal share of reimbursement requests are calculated correctly. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-010 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: Agency of Commerce and Community Development Federal Program: Community Development Block Grant Assistance Listing Number: 14.228 Award Number and Year: B-20-DW-50-0001 (2020) B-20-DC-50-0001 (2020) B-21-DC-50-0001 (2021) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR ?200.332 - Requirements for Pass-Through Entities states, in part, that all pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501 Audit requirements. Control: Per 2 CFR Section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The State of Vermont Agency of Commerce and Community Development was not able to provide support that it ensured its subrecipients were audited as required by 2 CFR Part 200 Subpart F ? Audit Requirements (Subpart F). Context: Exceptions were noted in three of eight subrecipients selected for testing: ? For three of eight subrecipients, the Agency was unable to provide support that it ensured the subrecipients were audited as required by Subpart F. Questioned costs: Undetermined. Cause: The Agency did not establish effective internal controls and procedures over subrecipient monitoring to ensure that it issued and monitored subawards in accordance with 2 CFR section 200.332. Effect: Failure to ensure subrecipients have obtained audits as required by Subpart F increases the risk that subrecipients may inappropriately spend and/or inaccurately track and report federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, or corrected on a timely basis. Questioned costs: Undetermined Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that an evaluation of independent audits is performed. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-011 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: Agency of Commerce and Community Development Federal Program: Community Development Block Grant Assistance Listing Number: 14.228 Award Number and Year: B-20-DW-50-0001 (2020) B-20-DC-50-0001 (2020) B-21-DC-50-0001 (2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Commerce and Community Development was not in compliance with FSRS reporting requirements. Various subawards and subaward modifications were not reported to FSRS or inaccurately reported key data elements. Context: Three of eight subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 1 of 8 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 1 of 8 subawards were issued amendments to the original subaward, but the amendments were not reported accurately. ? 1 of 8 subawards reported the incorrect subaward obligation/action date (key data element). Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely and accurately to FSRS no later than the end of the month following the month of issuance. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-012 Prior Year Finding: 2021-009 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI326301955A50 (5/20/2021 ? 12/31/2021) UI340892055A50 (10/1/2019 ? 12/31/2022) UI345252060A50 (1/1/2020 ? 9/30/2022) UI347462055A50 (4/1/2021 ? 6/30/2024) UI356792155A50 (10/1/2020 ? 12/31/2023) UI357352155A50 (10/1/2020 ? 9/30/2021) UI359762160A50 (1/1/2021 ? 9/30/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) UI373112255A50 (10/1/2021 ? 9/30/2022) UI380102260A50 (1/1/2022 ? 9/30/2022) CARES Act PL 116-136 (3/13/2020 ? 9/6/2021) Compliance Requirement: Reporting Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: ETA 191, Financial Status of UCFE/UCX (OMB No. 1205-0162) ? Quarterly report on UCFE and UCX expenditures and the total amount of benefits paid to claimants of specific federal agencies (ET Handbook 401). Per federal regulations, the ETA 191 should be submitted electronically to the National Office by the 25th of the month following the close of the quarter. ETA 2112, UI Financial Transaction Summary (OMB No. 1205-0154) ? A monthly summary of transactions, which account for all funds received in, passed through, or paid out of the state unemployment fund (ET Handbook 401). Per federal regulations, the ETA 2112 should be submitted electronically to the National Office by the 1st day of the second month following the close of the reporting month. ETA 9130, Financial Status Report, UI Programs ? All ETA grantees are required to submit quarterly financial reports for each grant award which they operate, including standard program and pilot, demonstration, and evaluation projects. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. A separate ETA 9130 is submitted for each of the following: UI, PEUC, and PUA Administration, DUA, TRA/RTAA, and UA Projects (administration and benefits). ETA 9050, Time Lapse of All First Payments except Workshare ? The ETA 9050 report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. That data addressed first payment time lapse for total unemployment only. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9052, Nonmonetary Determination Time Lapse Detection - The ETA 9052 report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Note: Overpayment notices on uncontested earnings detected by any method (e.g., crossmatch) should not be included. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9055, Appeals Case Aging - The ETA 9055 report gathers monthly information on the inventory of lower authority and higher authority single claimant appeals cases that have been filed but not decided. Appeals case aging provides information about the number of days from the date an appeal was filed through the end of the month covered by the report. Also included are the average and median ages of the pending single claimant appeals cases. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 2208A, Quarterly UI Above-Base Report - The ETA 2208A is a quarterly report of staff years worked and paid by program category. Reports are submitted electronically to the National Office by the 30th of the month following the close of the quarter. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department was not able to provide support that it had submitted required financial and performance reports by the due dates nor that reports had been reviewed and approved by an authorized State official prior to submission. Questioned costs: Undetermined. Context: We reviewed a sample of the ETA 191, ETA 2112 and ETA 9130 financial reports, a sample of the ETA 9050, ETA 9052 and ETA 9055 performance reports, and a sample of ETA 2208A special reports filed during FY 2022. The following exceptions were noted: ETA 191: 2 of 2 quarterly reports reviewed were submitted after the required due date. Reports for the quarters ending 9/30/2021 and 3/31/2022 were both submitted 23 days late. In addition, support could not be provided to document that the reports had been reviewed and approved prior to submission. ETA 2112: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date. ETA 9130: Reports for the 9/30/2021 and 3/31/2022 quarters were reviewed which included 11 individual grant reports for each quarter, or 22 reports in total. 1 of 11 grant reports for the 9/30/2021 quarter was submitted after the due date. The report was due on 11/14/2021 but was submitted on 11/17/2021, or 3 days late. ETA 9050: Support could not be provided that 4 of 4 reports reviewed had been reviewed and approved prior to submission. ETA 9052: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 9055: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 2208A: 2 of 2 quarterly reports reviewed were submitted after the required due date. The report for the quarter ending 9/30/2021 was due by 10/30/2021 but was submitted on 11/10/2021, or 11 days late. The report for the quarter ending 3/31/2022 was due 4/30/2022 but was submitted on 6/17/2022, or 48 days late. Cause: The Department does not have sufficient internal controls in place over compliance with Unemployment Insurance reporting requirements to ensure that reports are submitted timely and that they are reviewed and approved prior to submission. Effect: Financial, performance and special reports were consistently submitted late. A lack of review and approval of financial and performance reports could allow incorrect data to be reported for the program which could misrepresent the State?s financial and programmatic performance in the program. Recommendation: We recommend that policies and procedures be implemented to ensure that all financial, performance, and special reports are filed timely and accurately and that reports are reviewed and approved by an authorized State official prior to submission. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-013 Prior Year Finding: 2021-012 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: CARES Act PL 116-136 (3/27/2020 ? 9/6/2021) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance ? State Workforce Agencies (SWA) responsibilities include: (1) establishing specific, detailed policies and operating procedures which comply with the requirements of federal laws and regulations; (2) determining the state UI tax structure; (3) collecting state UI contributions from employers (commonly called ?unemployment taxes?); (4) determining claimant eligibility and disqualification provisions; (5) making payment of UI benefits to claimants; (6) managing the program?s revenue and benefit administrative functions; (7) administering the programs in accordance with established policies and procedures; and (8) enacting state UC law that conforms with federal UC law. UIPL No. 16-20 ? The Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020, included the Continued Assistance for Unemployed Workers Act of 2020 (Continued Assistance Act) in Division N, Title II, Subtitle A. The Continued Assistance Act extended the PUA program and enacted several program integrity measures, including a requirement that all individuals receiving a PUA payment on or after December 27, 2020, submit documentation substantiating employment, self-employment, or the planned commencement of employment or self-employment. The PUA program ended September 6, 2021. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Regular Unemployment Insurance program is administered by the Department of Labor (Department) and gives financial aid to unemployed individuals. In 2020, the federal government created new temporary unemployment insurance programs, including the Pandemic Unemployment Assistance (PUA) program, the Pandemic Emergency Unemployment Insurance (PEUC), and the Federal Pandemic Unemployment Compensation (FPUC) program, to further help individuals who lost their jobs due to COVID-19. The COVID-19 pandemic significantly increased the unemployment rate nationally and in Vermont. Before the pandemic, the national unemployment rate was about 4% in January 2020 and about 3% in Vermont. By April 2020, the national unemployment rate, and the Vermont rate both increased to about 15%. While the State?s unemployment rate declined to 2.2% percent in June 2022, the estimated unsupported claims and payments from these programs were significant to the State. Questioned costs: Undetermined. Context: Tests of effectiveness over controls surrounding PUA claims identified that thirty-eight (38) out of thirty-eight (38) PUA claims samples tested had no evidence of review nor timely review of wage support. Cause: The Department was unable to respond in a timely and effective manner to address the significant increase in claims and federal funds that continued throughout fiscal year 2022. Effect: The Department paid a significant amount of unsupported claims through the unemployment insurance program as a result of the COVID-19 pandemic. Claims were paid without the required wage support documentation and without review by the Department as required by USDOL. Recommendation: We recommend the State and the Department perform a thorough risk assessment over the unemployment insurance program and design controls and processes to address identified risks. Seeking continuous improvement to its risk assessment and internal processes is key to strengthening governance, risk management, internal controls, program management and overall operations within the program. Views of responsible officials: The Department acknowledges and accepts this finding, and as this is a repeat finding from last year?s ACFR audit, the Department maintains the same response and corrective action plan. The Pandemic Unemployment Assistance (PUA) program did not exist prior to the COVID-19 global health pandemic. Unlike the unemployment insurance program, which has been in existence since 1935, the PUA program did not have the inherent checks and balances built into the system to ensure proper program administration. Instead, state workforce agencies were expected to build the PUA program from the ground up with little guidance from the USDOL all the while managing through a pandemic that caused unprecedented upheaval in the employment status of millions of citizens. It is accurate that the Vermont Department of Labor was not able to implement the necessary checks and balances into the PUA program to ensure proper program eligibility. As has been pointed out in the audit finding, it was not until nine months after the start of the PUA program that Congress passed legislation that required documentation to be provided to substantiate program eligibility. At that time, due to the significant and unprecedented strains on the Department of Labor?s resources, the newly established documentation requirements were not able to be implemented prior to the end of the PUA program. The Department acknowledges that the lack of the ability to review claimant financial eligibility may have resulted in improper payments. It is important to point out that UIPL 16-20, Change 4 was issued on January 8, 2021, providing no time for UI programs to implement the required changes while still continuing to provide vital economic assistance to tens of thousands of individuals. The only other recourse available to the Department at that time would have been to stop program payments from issuing until the new eligibility requirements were reviewed. This would have left claimants without benefits for months while the Department used our limited financial and staff resources to implement the necessary changes. This is the result of the continuously changing eligibility requirements built from hastily implemented legislation and program design. In calendar year 2022, the Department began the process of retroactively reviewing all PUA claims that were filed and paid after the date of UIPL 16-20, Change 4 to ensure that proper documentation was provided to ensure program eligibility. Where appropriate, claims are being placed into an overpayment status and collection efforts will ensue.
Reference Number: 2022-014 Prior Year Finding: 2021-010 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: State UC, UCFE, and UCX (7/1/2021 ? 6/31/2022) Compliance Requirement: Special Tests and Provisions: UI Benefit Payments Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance ? The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL?s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is excepted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. The "year" includes all batches of weeks ending in the calendar year. Completion of Paid Claims Cases: ? a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; ? 95 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Completion of Denied Claims Cases: ? a minimum of 60 percent of cases must be completed within 60 days of the week ending date of the batch; ? 85 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the Calendar Year. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department of Labor (Department) did not complete BAM case investigations within the time limits established in ET Handbook No. 395. Questioned costs: Undetermined. Context: Forty cases were selected for testing, of which 18 were Paid Claims and 22 were Denied Claims. We noted the following exceptions: ? The Department did not meet the required time limits for closing Paid Claims cases within 90 days. We noted that 83% of cases tested were closed within 90 days which is less than the required 95%. ? 2 of 40 cases were missing documentation of supervisory review and approval. Cause: The Department?s procedures were not sufficient to ensure that BAM case investigations were completed within the time limits required by the program and that documentation was maintained. Internal controls did not prevent or detect the errors. Effect: Noncompliance with BAM case investigation time limits and documentation requirements could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend that the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely, and that documentation of supervisory review and approval is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-015 Prior Year Finding: 2021-011 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI345252060A50 (1/1/2020 ? 9/30/2022) UI359762160A50 (1/1/2021 ? 9/30/2023) UI380102260A50 (1/1/2022 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: The UI program serves as one of the principal ?gateways? to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI?s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA?s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 13-21 provides RESEA operating Guidance for FY 2021. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Questioned costs: Undetermined. Context: Sixty cases were selected for testing and the following exceptions were noted: ? 5 of 60 samples selected were missing the Eligibility Review Questionnaire form and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing a copy of the JobLink status and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing documentation of adjudication. Cause: The Department?s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant?s eligibility and supervisory review, it is possible that ineligible participants could receive benefits from the program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant?s eligibility and review by a UI supervisor. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-016 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) charged costs to the program that were issued without documentation of supervisory review and approval. Questioned costs: None noted. The costs were determined to be allowable. Context: For five of forty general disbursement transactions selected for testing, the Department was unable to provide documentation of supervisory review and approval prior to issuance of payment to the vendor. Cause: The Department?s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Internal controls did not prevent or detect the errors. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the Department reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-017 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Period of Performance Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Costs were incurred and charged to the federal grant prior to the allowable start of the period of performance. Questioned costs: Below the reportable limit. Context: One of forty transactions was charged to the award before the allowable period of performance. The grant award start date was 10/1/2021 but a transaction dated 8/31/2021 in the amount of $7,421 was charged to the award. Cause: The Department of Labor?s (Department?s) procedures were not sufficient to ensure that expenditures charged to the program were incurred within the award?s period of performance. Internal controls did not prevent or detect the error. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award?s allowable period of performance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-012 Prior Year Finding: 2021-009 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI326301955A50 (5/20/2021 ? 12/31/2021) UI340892055A50 (10/1/2019 ? 12/31/2022) UI345252060A50 (1/1/2020 ? 9/30/2022) UI347462055A50 (4/1/2021 ? 6/30/2024) UI356792155A50 (10/1/2020 ? 12/31/2023) UI357352155A50 (10/1/2020 ? 9/30/2021) UI359762160A50 (1/1/2021 ? 9/30/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) UI373112255A50 (10/1/2021 ? 9/30/2022) UI380102260A50 (1/1/2022 ? 9/30/2022) CARES Act PL 116-136 (3/13/2020 ? 9/6/2021) Compliance Requirement: Reporting Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: ETA 191, Financial Status of UCFE/UCX (OMB No. 1205-0162) ? Quarterly report on UCFE and UCX expenditures and the total amount of benefits paid to claimants of specific federal agencies (ET Handbook 401). Per federal regulations, the ETA 191 should be submitted electronically to the National Office by the 25th of the month following the close of the quarter. ETA 2112, UI Financial Transaction Summary (OMB No. 1205-0154) ? A monthly summary of transactions, which account for all funds received in, passed through, or paid out of the state unemployment fund (ET Handbook 401). Per federal regulations, the ETA 2112 should be submitted electronically to the National Office by the 1st day of the second month following the close of the reporting month. ETA 9130, Financial Status Report, UI Programs ? All ETA grantees are required to submit quarterly financial reports for each grant award which they operate, including standard program and pilot, demonstration, and evaluation projects. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. A separate ETA 9130 is submitted for each of the following: UI, PEUC, and PUA Administration, DUA, TRA/RTAA, and UA Projects (administration and benefits). ETA 9050, Time Lapse of All First Payments except Workshare ? The ETA 9050 report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. That data addressed first payment time lapse for total unemployment only. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9052, Nonmonetary Determination Time Lapse Detection - The ETA 9052 report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Note: Overpayment notices on uncontested earnings detected by any method (e.g., crossmatch) should not be included. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9055, Appeals Case Aging - The ETA 9055 report gathers monthly information on the inventory of lower authority and higher authority single claimant appeals cases that have been filed but not decided. Appeals case aging provides information about the number of days from the date an appeal was filed through the end of the month covered by the report. Also included are the average and median ages of the pending single claimant appeals cases. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 2208A, Quarterly UI Above-Base Report - The ETA 2208A is a quarterly report of staff years worked and paid by program category. Reports are submitted electronically to the National Office by the 30th of the month following the close of the quarter. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department was not able to provide support that it had submitted required financial and performance reports by the due dates nor that reports had been reviewed and approved by an authorized State official prior to submission. Questioned costs: Undetermined. Context: We reviewed a sample of the ETA 191, ETA 2112 and ETA 9130 financial reports, a sample of the ETA 9050, ETA 9052 and ETA 9055 performance reports, and a sample of ETA 2208A special reports filed during FY 2022. The following exceptions were noted: ETA 191: 2 of 2 quarterly reports reviewed were submitted after the required due date. Reports for the quarters ending 9/30/2021 and 3/31/2022 were both submitted 23 days late. In addition, support could not be provided to document that the reports had been reviewed and approved prior to submission. ETA 2112: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date. ETA 9130: Reports for the 9/30/2021 and 3/31/2022 quarters were reviewed which included 11 individual grant reports for each quarter, or 22 reports in total. 1 of 11 grant reports for the 9/30/2021 quarter was submitted after the due date. The report was due on 11/14/2021 but was submitted on 11/17/2021, or 3 days late. ETA 9050: Support could not be provided that 4 of 4 reports reviewed had been reviewed and approved prior to submission. ETA 9052: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 9055: Support could not be provided that 4 of 4 reports reviewed were submitted by the required due date nor that the reports had been reviewed and approved prior to submission. ETA 2208A: 2 of 2 quarterly reports reviewed were submitted after the required due date. The report for the quarter ending 9/30/2021 was due by 10/30/2021 but was submitted on 11/10/2021, or 11 days late. The report for the quarter ending 3/31/2022 was due 4/30/2022 but was submitted on 6/17/2022, or 48 days late. Cause: The Department does not have sufficient internal controls in place over compliance with Unemployment Insurance reporting requirements to ensure that reports are submitted timely and that they are reviewed and approved prior to submission. Effect: Financial, performance and special reports were consistently submitted late. A lack of review and approval of financial and performance reports could allow incorrect data to be reported for the program which could misrepresent the State?s financial and programmatic performance in the program. Recommendation: We recommend that policies and procedures be implemented to ensure that all financial, performance, and special reports are filed timely and accurately and that reports are reviewed and approved by an authorized State official prior to submission. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-013 Prior Year Finding: 2021-012 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: CARES Act PL 116-136 (3/27/2020 ? 9/6/2021) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance ? State Workforce Agencies (SWA) responsibilities include: (1) establishing specific, detailed policies and operating procedures which comply with the requirements of federal laws and regulations; (2) determining the state UI tax structure; (3) collecting state UI contributions from employers (commonly called ?unemployment taxes?); (4) determining claimant eligibility and disqualification provisions; (5) making payment of UI benefits to claimants; (6) managing the program?s revenue and benefit administrative functions; (7) administering the programs in accordance with established policies and procedures; and (8) enacting state UC law that conforms with federal UC law. UIPL No. 16-20 ? The Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020, included the Continued Assistance for Unemployed Workers Act of 2020 (Continued Assistance Act) in Division N, Title II, Subtitle A. The Continued Assistance Act extended the PUA program and enacted several program integrity measures, including a requirement that all individuals receiving a PUA payment on or after December 27, 2020, submit documentation substantiating employment, self-employment, or the planned commencement of employment or self-employment. The PUA program ended September 6, 2021. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Regular Unemployment Insurance program is administered by the Department of Labor (Department) and gives financial aid to unemployed individuals. In 2020, the federal government created new temporary unemployment insurance programs, including the Pandemic Unemployment Assistance (PUA) program, the Pandemic Emergency Unemployment Insurance (PEUC), and the Federal Pandemic Unemployment Compensation (FPUC) program, to further help individuals who lost their jobs due to COVID-19. The COVID-19 pandemic significantly increased the unemployment rate nationally and in Vermont. Before the pandemic, the national unemployment rate was about 4% in January 2020 and about 3% in Vermont. By April 2020, the national unemployment rate, and the Vermont rate both increased to about 15%. While the State?s unemployment rate declined to 2.2% percent in June 2022, the estimated unsupported claims and payments from these programs were significant to the State. Questioned costs: Undetermined. Context: Tests of effectiveness over controls surrounding PUA claims identified that thirty-eight (38) out of thirty-eight (38) PUA claims samples tested had no evidence of review nor timely review of wage support. Cause: The Department was unable to respond in a timely and effective manner to address the significant increase in claims and federal funds that continued throughout fiscal year 2022. Effect: The Department paid a significant amount of unsupported claims through the unemployment insurance program as a result of the COVID-19 pandemic. Claims were paid without the required wage support documentation and without review by the Department as required by USDOL. Recommendation: We recommend the State and the Department perform a thorough risk assessment over the unemployment insurance program and design controls and processes to address identified risks. Seeking continuous improvement to its risk assessment and internal processes is key to strengthening governance, risk management, internal controls, program management and overall operations within the program. Views of responsible officials: The Department acknowledges and accepts this finding, and as this is a repeat finding from last year?s ACFR audit, the Department maintains the same response and corrective action plan. The Pandemic Unemployment Assistance (PUA) program did not exist prior to the COVID-19 global health pandemic. Unlike the unemployment insurance program, which has been in existence since 1935, the PUA program did not have the inherent checks and balances built into the system to ensure proper program administration. Instead, state workforce agencies were expected to build the PUA program from the ground up with little guidance from the USDOL all the while managing through a pandemic that caused unprecedented upheaval in the employment status of millions of citizens. It is accurate that the Vermont Department of Labor was not able to implement the necessary checks and balances into the PUA program to ensure proper program eligibility. As has been pointed out in the audit finding, it was not until nine months after the start of the PUA program that Congress passed legislation that required documentation to be provided to substantiate program eligibility. At that time, due to the significant and unprecedented strains on the Department of Labor?s resources, the newly established documentation requirements were not able to be implemented prior to the end of the PUA program. The Department acknowledges that the lack of the ability to review claimant financial eligibility may have resulted in improper payments. It is important to point out that UIPL 16-20, Change 4 was issued on January 8, 2021, providing no time for UI programs to implement the required changes while still continuing to provide vital economic assistance to tens of thousands of individuals. The only other recourse available to the Department at that time would have been to stop program payments from issuing until the new eligibility requirements were reviewed. This would have left claimants without benefits for months while the Department used our limited financial and staff resources to implement the necessary changes. This is the result of the continuously changing eligibility requirements built from hastily implemented legislation and program design. In calendar year 2022, the Department began the process of retroactively reviewing all PUA claims that were filed and paid after the date of UIPL 16-20, Change 4 to ensure that proper documentation was provided to ensure program eligibility. Where appropriate, claims are being placed into an overpayment status and collection efforts will ensue.
Reference Number: 2022-014 Prior Year Finding: 2021-010 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: State UC, UCFE, and UCX (7/1/2021 ? 6/31/2022) Compliance Requirement: Special Tests and Provisions: UI Benefit Payments Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance ? The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL?s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is excepted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. The "year" includes all batches of weeks ending in the calendar year. Completion of Paid Claims Cases: ? a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; ? 95 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Completion of Denied Claims Cases: ? a minimum of 60 percent of cases must be completed within 60 days of the week ending date of the batch; ? 85 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the Calendar Year. Internal Control ? Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department of Labor (Department) did not complete BAM case investigations within the time limits established in ET Handbook No. 395. Questioned costs: Undetermined. Context: Forty cases were selected for testing, of which 18 were Paid Claims and 22 were Denied Claims. We noted the following exceptions: ? The Department did not meet the required time limits for closing Paid Claims cases within 90 days. We noted that 83% of cases tested were closed within 90 days which is less than the required 95%. ? 2 of 40 cases were missing documentation of supervisory review and approval. Cause: The Department?s procedures were not sufficient to ensure that BAM case investigations were completed within the time limits required by the program and that documentation was maintained. Internal controls did not prevent or detect the errors. Effect: Noncompliance with BAM case investigation time limits and documentation requirements could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend that the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely, and that documentation of supervisory review and approval is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-015 Prior Year Finding: 2021-011 Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI345252060A50 (1/1/2020 ? 9/30/2022) UI359762160A50 (1/1/2021 ? 9/30/2023) UI380102260A50 (1/1/2022 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: The UI program serves as one of the principal ?gateways? to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI?s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA?s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 13-21 provides RESEA operating Guidance for FY 2021. Internal Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with the guidance in "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 (COSO). Condition: The Department did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Questioned costs: Undetermined. Context: Sixty cases were selected for testing and the following exceptions were noted: ? 5 of 60 samples selected were missing the Eligibility Review Questionnaire form and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing a copy of the JobLink status and subsequently a lack of proper eligibility review and approval. ? 1 of 60 samples selected was missing documentation of adjudication. Cause: The Department?s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant?s eligibility and supervisory review, it is possible that ineligible participants could receive benefits from the program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant?s eligibility and review by a UI supervisor. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-016 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) charged costs to the program that were issued without documentation of supervisory review and approval. Questioned costs: None noted. The costs were determined to be allowable. Context: For five of forty general disbursement transactions selected for testing, the Department was unable to provide documentation of supervisory review and approval prior to issuance of payment to the vendor. Cause: The Department?s procedures were not sufficient to ensure that payments were reviewed and approved prior to issuance of payment. Internal controls did not prevent or detect the errors. Effect: Unallowable costs could be charged to the program if disbursements are not reviewed by a supervisor who is knowledgeable of program regulations regarding allowable costs. Recommendation: We recommend the Department reviews and enhances its procedures and controls regarding payment processing to ensure that, prior to charging costs to the program, they are reviewed by a supervisor who is knowledgeable of the regulations regarding allowable program costs and that documentation of the review is maintained. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-017 Prior Year Finding: No Federal Agency: Department of Labor State Agency: Vermont Department of Labor (Department) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372542255A50 (10/1/2021 ? 12/31/2024) Compliance Requirement: Period of Performance Type of Finding Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Costs were incurred and charged to the federal grant prior to the allowable start of the period of performance. Questioned costs: Below the reportable limit. Context: One of forty transactions was charged to the award before the allowable period of performance. The grant award start date was 10/1/2021 but a transaction dated 8/31/2021 in the amount of $7,421 was charged to the award. Cause: The Department of Labor?s (Department?s) procedures were not sufficient to ensure that expenditures charged to the program were incurred within the award?s period of performance. Internal controls did not prevent or detect the error. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award?s allowable period of performance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-018 Prior Year Finding: 2021-013 Federal Agency: Department of the Treasury State Agency: Department of Finance and Management (Finance) Federal Program: COVID-19 ? Coronavirus Relief Fund COVID-19 ? Emergency Rental Assistance COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019, 21.023, 21.027 Award Number and Year: SLT0049 (2020), SLT0083 (2020) ERA0029 (2021), ERAE0054 (2021), ERAE1023 (2021) SLFRP4407 (2021), SLFRP4563 (2021), SLFRP4453 (2021-2022) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. The schedule must also include the total amount provided to subrecipients from each Federal program. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors, including errors in both total expenditures and the amount provided to subrecipients. Context: The following SEFA reporting errors were noted during audit test work: 1. The amount provided to subrecipients under assistance listing 21.023 ? Emergency Rental Assistance was understated by $118.8 million, or 99%. The amount originally reported was $1.3 million but during audit test work it was determined that this amount should have been $120.1 million. 2. The amount provided to subrecipients under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds was understated by $77.3 million, or 89%. The amount originally reported was $9.7 million but during audit test work it was determined that this amount should have been $87 million. 3. Total expenditures reported under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds were overstated by $6.2 million, or 6%. The amount originally reported was $107.8 million but during audit test work it was determined that this amount should have been $101.6 million. The original reported amount included duplicate expenditures of approximately $6 million. 4. The amount provided to subrecipients under assistance listing 21.019 ? Coronavirus Relief Fund could not be verified. During the prior year?s audit, significant reporting errors were noted in the amount provided to subrecipients. During the current year?s audit, Finance indicated that it had not yet fully implemented the FY 2021 corrective action plan for this issue and, as a result, it was unable to verify the accuracy of the amount reported as provided to subrecipients during FY 2022. Questioned costs: Undetermined. Cause: Individual State agencies/departments prepare their own sections of the SEFA and submit them to Finance which compiles the State?s consolidated report. Procedures and internal controls were not sufficient to ensure that expenditures reported by Finance on the SEFA were accurate and were supported by detail expenditure transactions recorded in the State?s accounting system. On the initial SEFA submitted to auditors, approximately $6 million had been duplicated in total expenditures under 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Payments to subrecipients under Emergency Rental Assistance and Coronavirus State and Local Fiscal Recovery Funds were improperly coded in the State?s accounting system which caused them to be excluded when the SEFA was initially prepared. Further, the prior year?s corrective action plan had not been fully implemented to allow Finance to verify the accuracy of the amount reported as provided to subrecipients under the Coronavirus Relief Fund during FY 2022. Effect: The amount provided to subrecipients was incorrectly reported on the SEFA submitted to auditors which effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that Finance improve its SEFA compilation process to ensure that program expenditures and the amounts provided to subrecipients reported on the State?s SEFA are complete and accurate. We further recommend that Finance work with the State?s agencies and departments to review and enhance procedures and controls to ensure that subrecipient payments are accurately recorded in the State?s accounting system and that expenditure information submitted to Finance for inclusion on the State?s SEFA is accurate and ties to detail expenditure transactions in the State?s accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-019 Prior Year Finding: No Federal Agency: Department of the Treasury State Agency: Agency of Commerce and Community Development Federal Program: COVID-19 ? Homeowner Assistance Fund Assistance Listing Number: 21.026 Award Number and Year: HAF0030 (5/3/2021 ? 9/30/2026) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.305(b)(9), interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Per the U.S. Treasury?s Homeowner Assistance Fund (HAF) Frequently Asked Questions on Reporting Requirements, Question 1.15, in accordance with 2 CFR 200.305(b)(9)(ii), HAF participants may retain up to $500 in earned interest annually. Any additional interest must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: HAF Program funds transferred to the Agency of Commerce and Community Development (Agency) by the U.S. Treasury were deposited into an interest-bearing account, but interest earned over $500 per year was not remitted to the Department of Health and Human Services Payment Management System as required. Context: The Agency received two deposits from the U.S. Treasury for the program, $5,000,000 received on 8/27/2021 and $45,000,000 received on 2/1/2022 after approval of the HAF Plan. Funds were deposited into an interest-bearing account, but interest earned on HAF funds was not calculated. As a result of the audit, the Vermont State Treasurer?s Office calculated interest earned for the program during calendar year 2021 and calendar year 2022. Total interest earned in excess of $500 per year is $2,165 for 2021 and $325,564 for 2022. Cause: The Agency did not develop sufficient procedures and internal controls to calculate interest earned on program funds and was unaware that it had earned interest in excess of $500 per year which should have been remitted to the Department of Health and Human Services. Effect: The State of Vermont retained interest earned on program funds and did not remit earnings over $500 per year to the Department of Health and Human Services as required. Questioned costs: Undetermined. Recommendation: We recommend the Agency work with U.S. Treasury officials regarding resolution of this matter. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-018 Prior Year Finding: 2021-013 Federal Agency: Department of the Treasury State Agency: Department of Finance and Management (Finance) Federal Program: COVID-19 ? Coronavirus Relief Fund COVID-19 ? Emergency Rental Assistance COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019, 21.023, 21.027 Award Number and Year: SLT0049 (2020), SLT0083 (2020) ERA0029 (2021), ERAE0054 (2021), ERAE1023 (2021) SLFRP4407 (2021), SLFRP4563 (2021), SLFRP4453 (2021-2022) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. The schedule must also include the total amount provided to subrecipients from each Federal program. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors, including errors in both total expenditures and the amount provided to subrecipients. Context: The following SEFA reporting errors were noted during audit test work: 1. The amount provided to subrecipients under assistance listing 21.023 ? Emergency Rental Assistance was understated by $118.8 million, or 99%. The amount originally reported was $1.3 million but during audit test work it was determined that this amount should have been $120.1 million. 2. The amount provided to subrecipients under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds was understated by $77.3 million, or 89%. The amount originally reported was $9.7 million but during audit test work it was determined that this amount should have been $87 million. 3. Total expenditures reported under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds were overstated by $6.2 million, or 6%. The amount originally reported was $107.8 million but during audit test work it was determined that this amount should have been $101.6 million. The original reported amount included duplicate expenditures of approximately $6 million. 4. The amount provided to subrecipients under assistance listing 21.019 ? Coronavirus Relief Fund could not be verified. During the prior year?s audit, significant reporting errors were noted in the amount provided to subrecipients. During the current year?s audit, Finance indicated that it had not yet fully implemented the FY 2021 corrective action plan for this issue and, as a result, it was unable to verify the accuracy of the amount reported as provided to subrecipients during FY 2022. Questioned costs: Undetermined. Cause: Individual State agencies/departments prepare their own sections of the SEFA and submit them to Finance which compiles the State?s consolidated report. Procedures and internal controls were not sufficient to ensure that expenditures reported by Finance on the SEFA were accurate and were supported by detail expenditure transactions recorded in the State?s accounting system. On the initial SEFA submitted to auditors, approximately $6 million had been duplicated in total expenditures under 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Payments to subrecipients under Emergency Rental Assistance and Coronavirus State and Local Fiscal Recovery Funds were improperly coded in the State?s accounting system which caused them to be excluded when the SEFA was initially prepared. Further, the prior year?s corrective action plan had not been fully implemented to allow Finance to verify the accuracy of the amount reported as provided to subrecipients under the Coronavirus Relief Fund during FY 2022. Effect: The amount provided to subrecipients was incorrectly reported on the SEFA submitted to auditors which effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that Finance improve its SEFA compilation process to ensure that program expenditures and the amounts provided to subrecipients reported on the State?s SEFA are complete and accurate. We further recommend that Finance work with the State?s agencies and departments to review and enhance procedures and controls to ensure that subrecipient payments are accurately recorded in the State?s accounting system and that expenditure information submitted to Finance for inclusion on the State?s SEFA is accurate and ties to detail expenditure transactions in the State?s accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-020 Prior Year Finding: No Federal Agency: Department of the Treasury State Agency: Agency of Administration Federal Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: SLFRP4407 (3/1/2021 ? 12/31/2024) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Payments to subrecipients were incorrectly recorded in the Agency of Administration?s (Agency?s) accounting system as payments for Unemployment Compensation. Context: Sixty payroll related expenditures were selected for testing, including two payments recorded as Unemployment Compensation. The two unemployment compensation payments were determined to be payments to subrecipients and were not payroll related. Although the payments, totaling $652,937, were incorrectly charged as Unemployment Compensation in the Agency?s accounting system, the costs were allowable subrecipient costs. Cause: The Agency?s procedures and controls were not sufficient to ensure that payments were properly recorded in the accounting system. Data entry errors occurred when the accounts payable transactions were recorded for payment and supervisory review and approval of the transactions did not detect the errors. Effect: Program expenditures were improperly recorded in the Agency?s accounting system. Failure to accurately record payments in the accounting system could lead to reporting errors, including incorrectly reporting payments to subrecipients. Questioned costs: None noted. Although the payments had been miscoded in the accounting system, the payments were allowable subrecipient costs. Recommendation: We recommend the Agency review and enhance procedures and internal controls to ensure that accounts payable transactions are properly recorded. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-021 Prior Year Finding: No Federal Agency: Department of the Treasury State Agency: Agency of Administration Federal Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: SLFRP4407 (3/1/2021 ? 12/31/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR ?200.332 - Requirements for Pass-Through Entities states, in part, that all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1)(iii) Federal Award Identification Number (FAIN); Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Required federal award information was omitted from a subaward issued from the program. Context: The Agency of Administration (Agency) has oversight responsibility for Coronavirus State and Local Fiscal Recovery Funds expenditures and reporting for the State of Vermont (the State). Multiple agencies and departments within the State incur costs and issue subawards charged to the program. Twelve subrecipients were selected for testing and the Department of Public Service (Department) issued a subaward to 1 of the 12 subrecipients. The Federal Award Identification Number (FAIN) was not included on this subaward. Cause: The Department did not establish effective internal controls and procedures over subrecipient monitoring. It was unable to ensure that it provided all required information to its subrecipients upon award issuance. The Agency?s oversight of the program did not detect the error. Effect: Excluding the required federal grant award information at the time of subaward issuance may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports. Questioned costs: Undetermined. Recommendation: We recommend the Agency work with the Department to review and enhance internal controls and procedures to ensure that all required federal award information is included in subawards. We further recommend that the Agency review its oversight procedures and controls to ensure that all State agencies and departments that issue subawards under the program are in compliance with federal requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-022 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Award Number and Year: S010A200045 (7/1/2020 ? 9/30/2021) S01A210045 (7/1/2021-9/30/2022) Compliance Requirement: Reporting ? Financial Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of U.S. Department of Education funds use the G5 system to simultaneously request cash reimbursements and report expenditures. The G5 system is in lieu of the SF-270 ? Request for Advance or Reimbursement. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had reported for drawdown in the G5 system was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA). The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had reported and drawn down in the G5 system for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted the total reported draws were $5.9 million (approximately 16%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draws in the G5 system were complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over financial reporting to ensure that cash draws requested in the G5 system are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-023 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Award Number and Year: S010A200045 (7/1/2020 ? 9/30/2021) S01A210045 (7/1/2021-9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported accurately to FSRS or were not reported timely. Context: Nineteen subawards were selected for testing and many of these subawards were amended several times for a total of sixty transactions tested. Specifically, the following exceptions were noted: ? 9 of 41 subaward amendments reported an incorrect amount to FSRS. When reporting the amendments, the Agency frequently reported the cumulative subaward amount rather than only the current amendment amount which overstated the total amount reported for these subawards. ? 1 of 41 amendments were not reported to FSRS. ? 1 of 19 original subawards were not reported timely to FSRS. ? 1 of 41 subaward amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely and accurately to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported timely or accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-024 Prior Year Finding: No Federal Agency: U.S. Department of Labor U.S. Department of Education State Agency: Department of Labor Agency of Education Department of Finance and Management Federal Program: Unemployment Insurance Title I Grants to Local Educational Agencies Special Education Cluster Assistance Listing Number: 17.225, 84.010, 84.027 and 84.173 Award Number and Year: UI340892055A50 (10/1/2019 ? 12/31/2022) UI356792155A50 (10/1/2020 ? 12/31/2023) UI372542255A50 (10/1/2021 ? 12/31/2024) S010A200045 (7/1/2020 ? 9/30/2021), S01A210045 (7/1/2021-9/30/2022) H027A200098 (7/1/2020 ? 9/30/2021), H173A200106 (7/1/2020 ? 9/30/2021), H027A210098 (7/1/2021 ? 9/30/2022), H173A210106 (7/1/2021 ? 9/30/2022) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Per 2 CFR section 200.514(a)(5), if a State fails to request funds timely as set forth in 2 CFR section 205.29, or otherwise fails to apply a funding technique properly, we may deny any resulting Federal interest liability, notwithstanding any other provision of this section. Annual Reports are submitted electronically by December 31 of each year. The Annual Report includes Federal interest liabilities, State interest liabilities, and State direct cost claims. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Department of Labor (Department) and the Agency of Education (Agency) were not in compliance with the funding techniques included in the State? CMIA Treasury-State Agreement. Federal interest liabilities were improperly calculated on the CMIA Annual Report by the Department of Finance and Management (Finance) for Unemployment Insurance, Title I Grants to Local Educational Agencies, and the Special Education Cluster. Context: The following exceptions were noted when testing compliance with Cash Management: Department of Labor ? The Department was not in compliance with the Prior Month Actual funding technique included in the State?s Treasury-State Agreement. The funding technique requires cash draws to occur on a monthly basis, however, the Department performed multiple cash draws during certain months and other cash draws were performed inconsistently with this funding technique. We noted that the Department did not perform cash draws early, therefore, there is no State interest liability for these exceptions. Agency of Education ? The Agency was not in compliance with the funding techniques included in the State?s Treasury-State Agreement for the Title I Grants to Local Educational Agencies program and for the Special Education Cluster. The funding techniques for these programs required cash draws occur on a bi-weekly basis, or 26 times during the fiscal year. Instead, the Agency performed 11 cash draws on a random basis throughout the year. Department of Finance and Management ? Finance is the responsible State agency for submission of the CMIA Annual Report. The interest liability for the Unemployment Insurance program was calculated incorrectly and since the Agency of Education failed to request funds timely in accordance with the Treasury-State Agreement, a federal interest liability should not have been calculated for the Title I Grants to Local Education Agencies program nor for the Special Education Cluster. The following specific federal interest liability calculation errors were noted on the FY 2022 CMIA Annual Report: o $448 for Unemployment Insurance should have been calculated as $120. o $17,067 for Title I Grants to Local Educational Agencies should have been $0. o $12,706 for the Special Education Cluster should have been $0. Cause: The Agency?s and Department?s procedures were not sufficient to ensure that cash draws were performed timely per the terms of the Treasury-State Agreement. Internal controls did not detect or prevent these errors. Finance prepares the CMA Annual Report using data provided by the Agency and the Department. Finance?s CMIA Annual Report procedures were not sufficient to ensure that it calculated federal interest liabilities for these programs only when the State was entitled to this interest. Internal controls did not detect these errors prior to submission of the CMIA Annual Report. Effect: The Cash Management Improvement Act is intended to minimize the time between the transfer of federal funds to States and the payout of those funds for program purposes. When the Agency and Department do not draw down federal funds timely per the funding techniques included in the Treasury-State Agreement, it causes the State to advance its own funds for federal program purposes, negatively impacting the State?s cash flow. Improperly calculating Federal interest liabilities could potentially allow the State to receive interest payments to which it is not entitled per 2 CFR section 200.514. Questioned costs: Federal interest liabilities improperly calculated and included on the Annual Report: ? $328 for Unemployment Insurance, the difference between the $448 claimed and the allowable $120. ? $17,067 for Title I Grants to Local Educational Agencies ? $12,706 for the Special Education Cluster Recommendation: We recommend the Agency and the Department review and enhance their internal controls and procedures over cash management to ensure that cash draws are performed timely and in accordance with the funding techniques included in the State?s Treasury-State Agreement. We further recommend that Finance enhance its procedures and internal controls to ensure that federal interest liabilities are properly calculated in accordance with 2 CFR section 200.514. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-025 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Award Number and Year: H027A200098 (FY2020) H027A200098 - 20A (FY2021) H173A200106 (FY2020) H027A210098 (FY2021) H027A210098 - 21A (FY2022) H173A210106 (FY2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Subawards and subaward amendments were not reported to FSRS, were not reported accurately, or were not reported timely. Context: Twenty-six subawards were selected for testing and many of these subawards were amended several times for a total of fifty-two transactions tested. Specifically, the following exceptions were noted: ? 19 of 26 subawards were not reported to FSRS. Of these exceptions, 18 subawards were subsequently reported to FSRS after auditors requested samples for testing. ? 26 of 26 amendments were not reported to FSRS. ? 6 of 19 original subawards were reported incorrectly when reported to FSRS. ? 6 of 19 original subawards were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-029 Prior Year Finding: 2021-018 Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425U Award Number and Year: S425D210011 (1/5/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported to FSRS or were not reported timely. Context: Ten of thirty-two subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 2 of 32 subawards were not reported to FSRS. ? 5 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 2 of 32 subawards were not reported timely to FSRS. ? 1 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-026 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) Assistance Listing Number: 84.425C, 84.425D Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Participation of Private School Children Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: For programs under ESSER I and GEER I (Assistance Listing 84.425C and D), an LEA that receives funds under one or both of those programs must provide equitable services in the same manner as provided under section 1117 of Title I, Part A of the ESEA (20 USC 6320) (Assistance Listing 84.010) to students and teachers in private schools as determined in consultation with private school officials (section 18005(a) of the CARES Act). To meet this requirement, a Local Education Agency (LEA) must determine the proportional share of ESSER I or GEER I funds available for equitable services in accordance with section 1117(a)(4)(A) of the ESEA (20 USC 6320(a)(4)(A)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support the calculation of Participation of Private School Children set-aside amounts. Context: For 12 of 12 LEAs selected for testing, the Agency was unable to provide support to validate that the set-aside amounts for private school children had been determined appropriately. The total set asides were determined at the school district level and support was maintained at the LEA and not at the non-public (independent) school level. Therefore, auditors could not verify the accuracy of the set-aside calculations. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation supporting private school set-aside calculations. Effect: Auditors were unable to verify that set-aside calculations were accurate and determined properly. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over participation of private school children and that documentation supporting set-aside calculations is maintained and available for auditor review. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-029 Prior Year Finding: 2021-018 Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425U Award Number and Year: S425D210011 (1/5/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported to FSRS or were not reported timely. Context: Ten of thirty-two subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 2 of 32 subawards were not reported to FSRS. ? 5 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 2 of 32 subawards were not reported timely to FSRS. ? 1 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-028 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund Assistance Listing Number: 84.425C, 84.425R Award Number and Year: S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425R210033 (2/23/2021 ? 9/30/2022) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Equipment/Real Property Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. Per 2 CFR section 200.313(d), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was unable to provide supporting documentation for equipment purchased with program funds. The Agency did not maintain an equipment ledger or track equipment in accordance with 2 CFR section 200.313. Context: When auditors conducted an initial risk assessment of the program, the Agency was unable to provide an equipment ledger or other supporting documentation of equipment purchased with program funds and, therefore, materiality could not be determined. The Agency conducted a manual assessment over all personal property/equipment purchased with federal program funding. This assessment determined that approximately $78,000 of equipment was purchased using GEER funding. While this amount is immaterial to total funding dollars, materiality could only be determined due to the additional assessments performed. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation of equipment purchased with program funds. Effect: Equipment purchased with program funds was not managed and accounted for in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over equipment to ensure that it purchases and records equipment purchased with program funds in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-026 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) Assistance Listing Number: 84.425C, 84.425D Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Participation of Private School Children Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: For programs under ESSER I and GEER I (Assistance Listing 84.425C and D), an LEA that receives funds under one or both of those programs must provide equitable services in the same manner as provided under section 1117 of Title I, Part A of the ESEA (20 USC 6320) (Assistance Listing 84.010) to students and teachers in private schools as determined in consultation with private school officials (section 18005(a) of the CARES Act). To meet this requirement, a Local Education Agency (LEA) must determine the proportional share of ESSER I or GEER I funds available for equitable services in accordance with section 1117(a)(4)(A) of the ESEA (20 USC 6320(a)(4)(A)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support the calculation of Participation of Private School Children set-aside amounts. Context: For 12 of 12 LEAs selected for testing, the Agency was unable to provide support to validate that the set-aside amounts for private school children had been determined appropriately. The total set asides were determined at the school district level and support was maintained at the LEA and not at the non-public (independent) school level. Therefore, auditors could not verify the accuracy of the set-aside calculations. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation supporting private school set-aside calculations. Effect: Auditors were unable to verify that set-aside calculations were accurate and determined properly. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over participation of private school children and that documentation supporting set-aside calculations is maintained and available for auditor review. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-027 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425R, 84.425U Award Number and Year: S425D200011 (4/29/2020 ? 9/30/2021) S425D210011 (1/5/2021 ? 9/30/2022) S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) S425R210033 (2/23/2021 ? 9/30/2022) S425W210047 (4/23/2021 ? 9/30/2023) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Cash Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.302, each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not able to support that the amount it had drawn down for the program was accurate and was supported by expenditures recorded in its accounting system and reported on the Schedule of Expenditures of Federal Awards (SEFA.) The total draws by the Agency were less than the total expenditures on the SEFA. Context: The Agency of Education (Agency) was unable to provide supporting documentation for the amount it had drawn down for the program as compared to expenditures it had incurred and reported on the Schedule of Expenditures of Federal Awards (SEFA). Auditors noted that total draws were $7.4 million (approximately 10%) less than expenditures reported on the SEFA. The Agency was unable to reconcile this variance. Cause: The Agency?s procedures and internal controls were not sufficient to account for timing differences and ensure that cash draws were complete, accurate and tied to expenditures incurred in its accounting system as reported on the SEFA. Effect: Auditors were unable to verify that cash draw population provided for testing was complete, accurate and supported by documentation recorded in the Agency?s accounting system. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over cash management to ensure that cash draws are complete, accurate, and that supporting documentation is maintained and agrees with expenditures recorded in its accounting system. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-028 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund Assistance Listing Number: 84.425C, 84.425R Award Number and Year: S425C200009 (5/6/2020 ? 9/30/2021) S425C210009 (1/8/2021 ? 9/30/2022) S425R210033 (2/23/2021 ? 9/30/2022) S425V210033 (1/21/2021 ? 9/30/2023) Compliance Requirement: Equipment/Real Property Management Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. Per 2 CFR section 200.313(d), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was unable to provide supporting documentation for equipment purchased with program funds. The Agency did not maintain an equipment ledger or track equipment in accordance with 2 CFR section 200.313. Context: When auditors conducted an initial risk assessment of the program, the Agency was unable to provide an equipment ledger or other supporting documentation of equipment purchased with program funds and, therefore, materiality could not be determined. The Agency conducted a manual assessment over all personal property/equipment purchased with federal program funding. This assessment determined that approximately $78,000 of equipment was purchased using GEER funding. While this amount is immaterial to total funding dollars, materiality could only be determined due to the additional assessments performed. Cause: The Agency?s procedures and internal controls were not sufficient to ensure it maintained documentation of equipment purchased with program funds. Effect: Equipment purchased with program funds was not managed and accounted for in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures over equipment to ensure that it purchases and records equipment purchased with program funds in accordance with State laws and procedures and in accordance with 2 CFR section 200.313. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-029 Prior Year Finding: 2021-018 Federal Agency: U.S. Department of Education State Agency: Agency of Education (Agency) Federal Program: COVID-19 ? Governor?s Emergency Education Relief Fund COVID-19 ? Elementary and Secondary School Emergency Relief Fund (ESSER) COVID-19 ? American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425C, 84.425D, 84.425U Award Number and Year: S425D210011 (1/5/2021 ? 9/30/2022) S425U210011 (3/24/2021 ? 9/30/2023) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Education (Agency) was not in compliance with FSRS reporting requirements. Several subawards and subaward modifications were not reported to FSRS or were not reported timely. Context: Ten of thirty-two subawards selected for testing were not in compliance with FFATA reporting requirements. The following exceptions were noted: ? 2 of 32 subawards were not reported to FSRS. ? 5 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported to FSRS. ? 2 of 32 subawards were not reported timely to FSRS. ? 1 of 32 subawards were issued amendments to the original subaward, but the amendments were not reported timely to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s procedures were not sufficient to ensure that all subawards and subaward amendments were reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported accurately to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward amendments are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-030 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Allowable Costs Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.403(a), except where otherwise authorized by statute, in order for a cost to be allowable under Federal awards it must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per 2 CFR section 200.405, a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency included an unallowable cost in an administrative cost pool which was allocated to the program. Context: The Agency?s Department of Health (Department) charged a settlement payment of $3,891.30 related to a Superfund site lawsuit to an administrative cost pool, and a portion of this payment was allocated to the program. The allocated cost was not necessary or reasonable for the performance of the Federal award nor was it assignable in part to the Federal award as a cost necessary to the overall operation of the Department. Cause: The Agency?s internal controls were not operating sufficiently to ensure that costs charged to an administrative cost pool were allowable and allocable per the requirements of 2 CFR sections 200.403 and 200.405. Effect: Unallowable costs were allocated to the program. Questioned costs: Undetermined, due to the distribution of costs through the Department?s approved cost allocation plan. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that costs charged to administrative cost pools are allowable and allocable per 2 CFR sections 200.403 and 200.405. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-031 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted reports after the due date. Context: Five of five subawards selected for testing were not reported timely to FSRS. Four of the five subawards tested were reported between 6 and 68 days late. One of the five subawards tested was issued in March 2022, but was not reported to FSRS until September 2022, or about five months after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. For one of the exceptions noted, the late report was initially caused by a delay in the grantee obtaining a Unique Entity ID (UEI), however, the Agency failed to report the subaward timely after the grantee?s UEI became available. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-030 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Allowable Costs Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.403(a), except where otherwise authorized by statute, in order for a cost to be allowable under Federal awards it must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per 2 CFR section 200.405, a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency included an unallowable cost in an administrative cost pool which was allocated to the program. Context: The Agency?s Department of Health (Department) charged a settlement payment of $3,891.30 related to a Superfund site lawsuit to an administrative cost pool, and a portion of this payment was allocated to the program. The allocated cost was not necessary or reasonable for the performance of the Federal award nor was it assignable in part to the Federal award as a cost necessary to the overall operation of the Department. Cause: The Agency?s internal controls were not operating sufficiently to ensure that costs charged to an administrative cost pool were allowable and allocable per the requirements of 2 CFR sections 200.403 and 200.405. Effect: Unallowable costs were allocated to the program. Questioned costs: Undetermined, due to the distribution of costs through the Department?s approved cost allocation plan. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that costs charged to administrative cost pools are allowable and allocable per 2 CFR sections 200.403 and 200.405. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-031 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: 19NH23IP922615 (7/1/2020 ? 6/30/2024) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted reports after the due date. Context: Five of five subawards selected for testing were not reported timely to FSRS. Four of the five subawards tested were reported between 6 and 68 days late. One of the five subawards tested was issued in March 2022, but was not reported to FSRS until September 2022, or about five months after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. For one of the exceptions noted, the late report was initially caused by a delay in the grantee obtaining a Unique Entity ID (UEI), however, the Agency failed to report the subaward timely after the grantee?s UEI became available. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-032 Prior Year Finding: 2021-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are required to submit quarterly Performance Measure Reports and Financial Reports, no later than 30 days after the end of each quarter, in accordance with the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency did not submit Performance Measure reports in a timely manner and documentation to support both Performance Measures and Financial reports was either missing or did not agree to submitted reports. Context: Performance Measure Reports: Reports for two quarters were selected for testing in which six performance reports were reviewed. Financial Reports: Reports for two quarters were selected for testing in which ten financial reports were reviewed. We noted the following exceptions: ? 2 of 6 Performance Measure Data Reports were not filed in a timely manner. One report was submitted 15 days late and another was submitted 64 days late. ? For 2 of 6 Performance Measure reports, supporting documentation could not be provided. ? For 1 of 10 Financial reports, supporting documentation provided for unliquidated obligations did not agree with the information reported. Support indicated that $7,900 was unliquidated, but the amount reported was $790. Cause: Procedures and controls were insufficient to ensure that supporting documentation was maintained and available for audit and that reports were filed accurately and timely. The reports are filed electronically, and the Agency did not maintain copies of all supporting documentation used to prepare Performance Measure reports. In addition, the Agency made a data entry error on one of the Financial reports and controls did not detect or prevent the error. Effect: Performance measure data reported for the program was untimely and unsupported with adequate documentation. The Agency reported the incorrect value of unliquidated obligations on one Financial report. Questioned costs: Undetermined due to a lack of supporting documentation. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required reports are filed accurately and timely and that supporting documentation is maintained and is available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-033 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted several reports after the due date. Context: Four of five subawards selected for testing were not reported timely to FSRS. The subawards were issued in February 2022 and should have been reported no later than March 31, 2022, but they were all reported on April 22, 2022, which was 22 days after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-032 Prior Year Finding: 2021-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are required to submit quarterly Performance Measure Reports and Financial Reports, no later than 30 days after the end of each quarter, in accordance with the terms and conditions of the Federal award. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency did not submit Performance Measure reports in a timely manner and documentation to support both Performance Measures and Financial reports was either missing or did not agree to submitted reports. Context: Performance Measure Reports: Reports for two quarters were selected for testing in which six performance reports were reviewed. Financial Reports: Reports for two quarters were selected for testing in which ten financial reports were reviewed. We noted the following exceptions: ? 2 of 6 Performance Measure Data Reports were not filed in a timely manner. One report was submitted 15 days late and another was submitted 64 days late. ? For 2 of 6 Performance Measure reports, supporting documentation could not be provided. ? For 1 of 10 Financial reports, supporting documentation provided for unliquidated obligations did not agree with the information reported. Support indicated that $7,900 was unliquidated, but the amount reported was $790. Cause: Procedures and controls were insufficient to ensure that supporting documentation was maintained and available for audit and that reports were filed accurately and timely. The reports are filed electronically, and the Agency did not maintain copies of all supporting documentation used to prepare Performance Measure reports. In addition, the Agency made a data entry error on one of the Financial reports and controls did not detect or prevent the error. Effect: Performance measure data reported for the program was untimely and unsupported with adequate documentation. The Agency reported the incorrect value of unliquidated obligations on one Financial report. Questioned costs: Undetermined due to a lack of supporting documentation. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required reports are filed accurately and timely and that supporting documentation is maintained and is available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-033 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 19NU50CK000520 (8/1/2019 ? 7/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subaward information was not reported to FSRS timely. The reporting deadline is no later than the last day of the month following the month in which a subaward is issued, but the Agency submitted several reports after the due date. Context: Four of five subawards selected for testing were not reported timely to FSRS. The subawards were issued in February 2022 and should have been reported no later than March 31, 2022, but they were all reported on April 22, 2022, which was 22 days after the due date. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency?s internal controls were not operating sufficiently to ensure that subawards were reported timely to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance, in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-034 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Foster Care ? Title IV-E Assistance Listing Number: 93.658 Award Number and Year: 2101VTFOST (10/1/2020 ? 9/30/2021) 2201VTFOST (10/1/2021 ? 9/30/2022) Compliance Requirement: Eligibility Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: A foster care provider, whether a foster family home or a child-care institution must be fully licensed by the proper State or tribal foster care licensing authority responsible for licensing such homes or child care institutions. The term ?child care institution? as defined in 45 CFR section 1355.20 includes a private child care institution, or a public child care institution which accommodates no more than 25 children, which is licensed by the State in which it is situated or has been approved, by the agency of such State responsible for licensing or approval of institutions of this type, as meeting the standards established for such licensing, but does not include detention facilities, forestry camps, training schools, or facilities operated primarily for the purpose of detention of children who are determined to be delinquent (42 USC 671(a)(10) and 672(c)). Effective October 1, 2010, the existing statutory definition of a child care institution includes a supervised setting in which an individual who has attained 18 years of age is living independently, consistent with conditions the Secretary establishes in regulations (42 USC 672(c)(2)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Human Services (Agency) was unable to provide documentation that all providers were fully licensed and determined eligible by the State foster care licensing authority to provide Foster Care services prior to issuance of payment for services provided to the program. Context: Sixty cases were selected for testing and the following exceptions were noted: ? For 2 of 60 cases, the providers were unlicensed at the time payment was made. License packets contain the criminal background and child abuse registry checks, therefore these criteria were unable to be verified. ? For 1 of 60 cases, the Agency was unable to provide documentation that the provider had been determined eligible. The Federal Share paid to the provider was $480. Cause: The Agency did not have sufficient controls in place to ensure that all providers were properly licensed and determined eligible to provide Foster Care services prior to issuance of payment. Effect The Agency made payments to unlicensed providers, and it was unable to provide documentation that another provider was properly licensed and eligible to provide services prior to issuing payments using Foster Care funds. Questioned costs: Below the reportable limit. Recommendation: We recommend the Agency review its procedures and controls over the licensing of providers to ensure that it maintains documentation that all providers are fully licensed and eligible to provide services prior to paying for services using federal Foster Care funds. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-035 Prior Year Finding: 2021-023 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Assistance Listing Number: 93.767 Award Number and Year: 2005VT5021 (10/1/2019 ? 9/30/2021) 2105VT5021 (10/1/2020 ? 9/30/2022) Compliance Requirement: Eligibility Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Eligibility is based on the application of modified adjusted gross income and household definition, in addition to other permissible eligibility standards, for example standards relating to geographic area, age (up to, but not including age 19), and insurance status. States are directed at 42 CFR 457.340(d) to determine eligibility promptly and without undue delay and 42 CFR 435.912(c)(3) states that the determination of eligibility may not exceed 45 days. Over the course of the COVID-19 public health emergency, state Medicaid and CHIP agencies adopted many flexibilities offered by the Centers for Medicare and Medicaid Services (CMS) to respond effectively to local outbreaks, including changes to modify eligibility requirements and benefit packages. States have made policy, programmatic, and systems changes to respond effectively to COVID-19 including satisfying a ?continuous enrollment condition? for most Medicaid and CHIP beneficiaries who were enrolled in the program as of or after March 18, 2020. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: The Agency of Human Services (Agency) did not document that a participant had turned 19 during the year and should be removed from enrollment at the conclusion of the Public Health Emergency (PHE). It also did not complete eligibility determinations in a timely manner. Context: Sixty participants were selected for testing and the following exceptions were noted: ? One of sixty participants selected for testing turned 19 during the fiscal year. Due to the ?continuous enrollment condition? of the PHE, the participant could not be removed from enrollment, but the Agency did not document that the participant should be removed from enrollment at the conclusion of the PHE. ? For one of sixty participants, eligibility determination exceeded 45 days. Cause: The Agency did not adequately follow procedures regarding eligibility in accordance with federal program requirements and internal controls did not detect or prevent the errors. Effect Failure to document that a participant should be removed from enrollment at the conclusion of the PHE could result in an ineligible participant receiving benefits from the program. Failure to complete eligibility determination timely could result in a delay in issuing benefits to participants. Questioned costs: Undetermined. Recommendation: We recommend that the Agency review and enhance procedures and controls for CHIP beneficiary eligibility determination to ensure that eligibility is determined promptly within federal requirements. We further recommend that participants who become ineligible during the PHE are documented in a timely manner to ensure that benefits to ineligible participants are properly terminated at the conclusion of the PHE. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-037 Prior Year Finding: 2021-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: We noted that the Agency did not maintain documentation to support providers? compliance with the prescribed health and safety standards. The Agency requires that providers complete a health and safety agreement in which they attest to compliance with the Agency?s health and safety requirements. The provider eligibility and health and safety requirements are administered by a 3rd-party that is required to determine and document providers? eligibility with the Agency?s requirements in the provider management module (PMM). Health and safety documentation was not consistently maintained in provider files and compliance could not be verified. Context: Of the 60 samples selected for testing, health and safety standards could not be verified for the following: 1. 39 of 60 provider files did not have current license information maintained in the PMM and the monthly screening process was not followed to validate the licenses. 2. One provider file was not available for review. 3. 3 of 60 provider files did not contain documentation that the provider was in good tax standing. Cause: The Agency?s 3rd-Party provider did not consistently maintain current documentation in the provider management module and controls did not detect or prevent the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-038 Prior Year Finding: 2021-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subawards were not reported to FSRS in accordance with FFATA requirements. The following errors were noted: ? Eighteen subawards and subaward amendments were not reported to FSRS. ? Three subawards and subaward amendments were not reported timely. ? One subaward was reported under an incorrect DUNS number. Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty-two subawards, totaling $10,711,156, were selected for testing and the following reporting errors were noted: ? Agency of Human Services Central Office (AHS-CO): Two subawards totaling $558,000 were not reported to FSRS. The subawards were issued on 10/1/2021 but were not reported to FSRS until after auditors selected them for testing. ? Department of Children and Families (DCF): One subaward of $32,284 was not reported timely. The subaward should have been reported no later than 1/31/2022 but it was reported on 2/17/2022, or 17 days late. ? Department of Mental Health (DMH): One subaward of $59,790 was not reported timely. The subaward should have been reported no later than 6/30/2022 but it was reported on 7/19/2022, or 19 days late. Three subaward amendments, totaling $31,475 were not reported to FSRS. ? Department of Aging and Independent Living (DAIL): One subaward of $42,369 was not reported timely. In addition, an amendment for the subaward was not reported. The amount not reported to FSRS was $8,400. ? Department of Vermont Health Access (DVHA): Two subawards totaling $130,231 were not reported to FSRS. One subaward of $38,364 was reported under an incorrect DUNS number. ? Vermont Department of Health (VDH): Eleven subawards totaling $7,416,814 were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward modifications are reported accurately to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-039 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 96.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Medical Loss Ratio (MLR) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: For all contracts, the state must ensure that each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) submits a report with the data elements specified in 42 CFR sections 438.8(k) and 438.8(n). The report should contain the required 13 data elements in the regulation, reflect the correct reporting years, and contain an attestation of accuracy regarding the calculation of the medical loss ratio. Managed care plans are required to submit the annual report in the time and manner established by the state, which must be within 12 months after the end of the MLR reporting year. The state should have a policy and procedure to indicate when the report(s) are due from plans and should not accept multiple submissions from plans unless the capitation payments are revised retroactively. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The 2020 Medical Loss Ratio report for the State?s Prepaid Inpatient Health Plan (PIHP) was not submitted within twelve months after the end of the reporting year. Context: The Agency of Human Services, Department of Vermont Health Access (DVHA) acts as its own PIHP. DVHA was required to submit the PIHP?s Medical Loss Ratio report for the year ending 12/31/2020 no later than 12/31/2021 but the report was not submitted until 2/2/2022. Cause: The Agency did not adequately follow procedures regarding timely submission of the Medical Loss Ratio report for its PIHP. Effect: The Agency is out of compliance with MLR reporting requirements. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and controls regarding Medical Loss Ratio reporting to ensure that reports for its PIHP are submitted timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-037 Prior Year Finding: 2021-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: We noted that the Agency did not maintain documentation to support providers? compliance with the prescribed health and safety standards. The Agency requires that providers complete a health and safety agreement in which they attest to compliance with the Agency?s health and safety requirements. The provider eligibility and health and safety requirements are administered by a 3rd-party that is required to determine and document providers? eligibility with the Agency?s requirements in the provider management module (PMM). Health and safety documentation was not consistently maintained in provider files and compliance could not be verified. Context: Of the 60 samples selected for testing, health and safety standards could not be verified for the following: 1. 39 of 60 provider files did not have current license information maintained in the PMM and the monthly screening process was not followed to validate the licenses. 2. One provider file was not available for review. 3. 3 of 60 provider files did not contain documentation that the provider was in good tax standing. Cause: The Agency?s 3rd-Party provider did not consistently maintain current documentation in the provider management module and controls did not detect or prevent the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-038 Prior Year Finding: 2021-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subawards were not reported to FSRS in accordance with FFATA requirements. The following errors were noted: ? Eighteen subawards and subaward amendments were not reported to FSRS. ? Three subawards and subaward amendments were not reported timely. ? One subaward was reported under an incorrect DUNS number. Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty-two subawards, totaling $10,711,156, were selected for testing and the following reporting errors were noted: ? Agency of Human Services Central Office (AHS-CO): Two subawards totaling $558,000 were not reported to FSRS. The subawards were issued on 10/1/2021 but were not reported to FSRS until after auditors selected them for testing. ? Department of Children and Families (DCF): One subaward of $32,284 was not reported timely. The subaward should have been reported no later than 1/31/2022 but it was reported on 2/17/2022, or 17 days late. ? Department of Mental Health (DMH): One subaward of $59,790 was not reported timely. The subaward should have been reported no later than 6/30/2022 but it was reported on 7/19/2022, or 19 days late. Three subaward amendments, totaling $31,475 were not reported to FSRS. ? Department of Aging and Independent Living (DAIL): One subaward of $42,369 was not reported timely. In addition, an amendment for the subaward was not reported. The amount not reported to FSRS was $8,400. ? Department of Vermont Health Access (DVHA): Two subawards totaling $130,231 were not reported to FSRS. One subaward of $38,364 was reported under an incorrect DUNS number. ? Vermont Department of Health (VDH): Eleven subawards totaling $7,416,814 were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward modifications are reported accurately to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-039 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 96.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Medical Loss Ratio (MLR) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: For all contracts, the state must ensure that each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) submits a report with the data elements specified in 42 CFR sections 438.8(k) and 438.8(n). The report should contain the required 13 data elements in the regulation, reflect the correct reporting years, and contain an attestation of accuracy regarding the calculation of the medical loss ratio. Managed care plans are required to submit the annual report in the time and manner established by the state, which must be within 12 months after the end of the MLR reporting year. The state should have a policy and procedure to indicate when the report(s) are due from plans and should not accept multiple submissions from plans unless the capitation payments are revised retroactively. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The 2020 Medical Loss Ratio report for the State?s Prepaid Inpatient Health Plan (PIHP) was not submitted within twelve months after the end of the reporting year. Context: The Agency of Human Services, Department of Vermont Health Access (DVHA) acts as its own PIHP. DVHA was required to submit the PIHP?s Medical Loss Ratio report for the year ending 12/31/2020 no later than 12/31/2021 but the report was not submitted until 2/2/2022. Cause: The Agency did not adequately follow procedures regarding timely submission of the Medical Loss Ratio report for its PIHP. Effect: The Agency is out of compliance with MLR reporting requirements. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and controls regarding Medical Loss Ratio reporting to ensure that reports for its PIHP are submitted timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-036 Prior Year Finding: 2021-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster Assistance Listing Number: 93.767, 93.775, 96.777, 93.778 Award Number and Year: 2105VT5021 (10/1/2020 ? 9/30/2021) 2205VT5021 (10/1/2021 ? 9/30/2022) 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: In order to receive Medicaid or CHIP payments, providers must: (1) be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid or CHIP programs (42 CFR sections 431.107, 447.10 and 457.900); and Section 1902(a)(9) of the Social Security Act (42 USC 396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Medicaid or CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The Agency did not maintain documentation to support provider eligibility to participate in the Medicaid and CHIP programs. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Agency?s requirements. License renewal information was not updated on a timely basis in the Provider Management Module (PMM). Context: Sixty Medicaid and sixty CHIP providers were selected for testing. Specifically, we noted the following exceptions: 1. 2 of 60 Medicaid and 2 of 60 CHIP provider files did not have current license information in the PMM. 2. For 3 of 60 Medicaid providers, the State did not maintain proper documentation that revalidation occurred within the required 5-year time frame. These providers were due for revalidation prior to the onset of the Public Health Emergency. 3. Documentation was incomplete to support that 6 of 60 CHIP providers were compliant with Vermont State law that providers must be in good tax standing to receive Medicaid funding. Cause: The Agency did not adequately follow procedures regarding Medicaid and CHIP provider eligibility in accordance with federal program requirements. Internal controls did not detect or prevent the errors. Effect: The Agency was unable to support provider eligibility or consistent application of their internal control process. Failure to maintain complete provider files and ensure that provider licenses are kept current could allow program payments to be made to an ineligible and/or unlicensed provider. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with the federal program requirements and that provider revalidations are performed timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-037 Prior Year Finding: 2021-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Provider Health and Safety Standards Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/IID (42 CFR part 442). The standards may be modified in the State Plan. The Medicaid Provider Enrollment Compendium (MPEC) requires that State Medicaid Agencies perform screening of providers based upon their risk level. Screening includes verifications of licenses and compliance with all federal and state regulations of the program. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: We noted that the Agency did not maintain documentation to support providers? compliance with the prescribed health and safety standards. The Agency requires that providers complete a health and safety agreement in which they attest to compliance with the Agency?s health and safety requirements. The provider eligibility and health and safety requirements are administered by a 3rd-party that is required to determine and document providers? eligibility with the Agency?s requirements in the provider management module (PMM). Health and safety documentation was not consistently maintained in provider files and compliance could not be verified. Context: Of the 60 samples selected for testing, health and safety standards could not be verified for the following: 1. 39 of 60 provider files did not have current license information maintained in the PMM and the monthly screening process was not followed to validate the licenses. 2. One provider file was not available for review. 3. 3 of 60 provider files did not contain documentation that the provider was in good tax standing. Cause: The Agency?s 3rd-Party provider did not consistently maintain current documentation in the provider management module and controls did not detect or prevent the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the Medicaid program. Questioned costs: Undetermined. Recommendation: We recommend the Agency review its procedures and controls to ensure that documentation is maintained in accordance with program requirements and that all providers are compliant with required health and safety standards. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-038 Prior Year Finding: 2021-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Subawards were not reported to FSRS in accordance with FFATA requirements. The following errors were noted: ? Eighteen subawards and subaward amendments were not reported to FSRS. ? Three subawards and subaward amendments were not reported timely. ? One subaward was reported under an incorrect DUNS number. Context: The Agency of Human Services (Agency) Internal Audit Group (IAG) reports subaward information in FSRS for its various departments using subaward information provided by the departments. Thirty-two subawards, totaling $10,711,156, were selected for testing and the following reporting errors were noted: ? Agency of Human Services Central Office (AHS-CO): Two subawards totaling $558,000 were not reported to FSRS. The subawards were issued on 10/1/2021 but were not reported to FSRS until after auditors selected them for testing. ? Department of Children and Families (DCF): One subaward of $32,284 was not reported timely. The subaward should have been reported no later than 1/31/2022 but it was reported on 2/17/2022, or 17 days late. ? Department of Mental Health (DMH): One subaward of $59,790 was not reported timely. The subaward should have been reported no later than 6/30/2022 but it was reported on 7/19/2022, or 19 days late. Three subaward amendments, totaling $31,475 were not reported to FSRS. ? Department of Aging and Independent Living (DAIL): One subaward of $42,369 was not reported timely. In addition, an amendment for the subaward was not reported. The amount not reported to FSRS was $8,400. ? Department of Vermont Health Access (DVHA): Two subawards totaling $130,231 were not reported to FSRS. One subaward of $38,364 was reported under an incorrect DUNS number. ? Vermont Department of Health (VDH): Eleven subawards totaling $7,416,814 were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The individual departments did not provide the IAG with complete subaward information on a timely basis which caused errors and omissions in subaward reporting to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review and enhance internal controls and procedures to ensure that all required subawards and subaward modifications are reported accurately to FSRS in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-039 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Agency of Human Services (Agency) Federal Program: Medicaid Cluster Assistance Listing Number: 93.775, 96.777, 93.778 Award Number and Year: 2105VT5MAP (10/1/2020 ? 9/30/2021) 2205VT5MAP (10/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions ? Medical Loss Ratio (MLR) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: For all contracts, the state must ensure that each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) submits a report with the data elements specified in 42 CFR sections 438.8(k) and 438.8(n). The report should contain the required 13 data elements in the regulation, reflect the correct reporting years, and contain an attestation of accuracy regarding the calculation of the medical loss ratio. Managed care plans are required to submit the annual report in the time and manner established by the state, which must be within 12 months after the end of the MLR reporting year. The state should have a policy and procedure to indicate when the report(s) are due from plans and should not accept multiple submissions from plans unless the capitation payments are revised retroactively. Control: Per 2 CFR section 200.303(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. These internal controls should be in compliance with guidance in ?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 (COSO). Condition: The 2020 Medical Loss Ratio report for the State?s Prepaid Inpatient Health Plan (PIHP) was not submitted within twelve months after the end of the reporting year. Context: The Agency of Human Services, Department of Vermont Health Access (DVHA) acts as its own PIHP. DVHA was required to submit the PIHP?s Medical Loss Ratio report for the year ending 12/31/2020 no later than 12/31/2021 but the report was not submitted until 2/2/2022. Cause: The Agency did not adequately follow procedures regarding timely submission of the Medical Loss Ratio report for its PIHP. Effect: The Agency is out of compliance with MLR reporting requirements. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance its procedures and controls regarding Medical Loss Ratio reporting to ensure that reports for its PIHP are submitted timely. Views of responsible officials: Management agrees with the finding.
Reference Number: 2022-018 Prior Year Finding: 2021-013 Federal Agency: Department of the Treasury State Agency: Department of Finance and Management (Finance) Federal Program: COVID-19 ? Coronavirus Relief Fund COVID-19 ? Emergency Rental Assistance COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019, 21.023, 21.027 Award Number and Year: SLT0049 (2020), SLT0083 (2020) ERA0029 (2021), ERAE0054 (2021), ERAE1023 (2021) SLFRP4407 (2021), SLFRP4563 (2021), SLFRP4453 (2021-2022) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. The schedule must also include the total amount provided to subrecipients from each Federal program. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in ?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 (COSO). Condition: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors, including errors in both total expenditures and the amount provided to subrecipients. Context: The following SEFA reporting errors were noted during audit test work: 1. The amount provided to subrecipients under assistance listing 21.023 ? Emergency Rental Assistance was understated by $118.8 million, or 99%. The amount originally reported was $1.3 million but during audit test work it was determined that this amount should have been $120.1 million. 2. The amount provided to subrecipients under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds was understated by $77.3 million, or 89%. The amount originally reported was $9.7 million but during audit test work it was determined that this amount should have been $87 million. 3. Total expenditures reported under assistance listing 21.027 ? Coronavirus State and Local Fiscal Recovery Funds were overstated by $6.2 million, or 6%. The amount originally reported was $107.8 million but during audit test work it was determined that this amount should have been $101.6 million. The original reported amount included duplicate expenditures of approximately $6 million. 4. The amount provided to subrecipients under assistance listing 21.019 ? Coronavirus Relief Fund could not be verified. During the prior year?s audit, significant reporting errors were noted in the amount provided to subrecipients. During the current year?s audit, Finance indicated that it had not yet fully implemented the FY 2021 corrective action plan for this issue and, as a result, it was unable to verify the accuracy of the amount reported as provided to subrecipients during FY 2022. Questioned costs: Undetermined. Cause: Individual State agencies/departments prepare their own sections of the SEFA and submit them to Finance which compiles the State?s consolidated report. Procedures and internal controls were not sufficient to ensure that expenditures reported by Finance on the SEFA were accurate and were supported by detail expenditure transactions recorded in the State?s accounting system. On the initial SEFA submitted to auditors, approximately $6 million had been duplicated in total expenditures under 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Payments to subrecipients under Emergency Rental Assistance and Coronavirus State and Local Fiscal Recovery Funds were improperly coded in the State?s accounting system which caused them to be excluded when the SEFA was initially prepared. Further, the prior year?s corrective action plan had not been fully implemented to allow Finance to verify the accuracy of the amount reported as provided to subrecipients under the Coronavirus Relief Fund during FY 2022. Effect: The amount provided to subrecipients was incorrectly reported on the SEFA submitted to auditors which effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that Finance improve its SEFA compilation process to ensure that program expenditures and the amounts provided to subrecipients reported on the State?s SEFA are complete and accurate. We further recommend that Finance work with the State?s agencies and departments to review and enhance procedures and controls to ensure that subrecipient payments are accurately recorded in the State?s accounting system and that expenditure information submitted to Finance for inclusion on the State?s SEFA is accurate and ties to detail expenditure transactions in the State?s accounting system. Views of responsible officials: Management agrees with the finding.