Finding Number: 2023-001
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet.
Questioned Costs – Known amount is $28,093.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809.
Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-002
Prior Year Finding Number: N/A
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 277.4(b), Federal reimbursement rate, states that the base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
Condition – During the testing of the SNAP Matching, Level of Effort, Earmarking compliance requirement, we noted that the quarterly SF-425 reports were approved and certified, and DHS/ESA exceeded the required SNAP Matching amount of $34,983,777. However, OCFO for DHS/ESA was unable to provide supporting documentation that would allow us to agree specific amounts reported as the match for fiscal year 2023.
OCFO for DHS/ESA was unable to provide support to enable recalculation of the exact amounts reported for (1) Certification for the 4th quarter, (2) Education and Training (E&T) 50% Grant for each of the four quarters, and (3) for New Investment for the 4th quarter, which is not allowed to be included as a match but must be spent by the agency. The total calculated amount by OCFO for DHS/ESA to be reported as the required match on the SF-425 report, excluding New investment, was $36,603,773. However, the total recalculated amount by auditors to be reported as the required match was $37,315,738. Variance between these two amounts was $711,965.
Questioned Costs – None.
Context – This is a condition identified per review of DHS/ESA’s compliance through the OCFO team with specified requirements using a statistically valid sample.
Effect – OCFO for DHS/ESA is not in compliance with the stated provisions. Without adequate internal controls to ensure reconciliation of the amounts reported for the matching requirements, there is an increased risk that matching will not be properly reported.
Cause – OCFO for DHS/ESA does not have appear to have adequate policies and procedures in place to ensure that the amounts reported for the matching requirement agreed to the support.
Recommendation – We recommend that OCFO for DHS/ESA strengthen its policies and procedures to ensure that amounts reported for SNAP matching requirements are properly reported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-003
Prior Year Finding Number: 2022-001
Compliance Requirement: Special Tests and Provisions – ADP System for SNAP
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Department of Health Care Finance (DHCF) DC Access System (DCAS) Program Management Administration
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 272.10(a), “All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP.”
Per 2 CFR Section 272.10(b), “In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas (1) Certification and (2) Issuance Reconciliation and Reporting. Under Certification – States agencies must determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Also, State agencies must redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances.”
Condition – The District is self-reporting findings it noted from its ongoing efforts to resolve issues with the ADP system for SNAP. The issues identified and the estimated impact follows:
1. Failure to Send Correct and Timely Notices to SNAP Households - Notices pertaining to SNAP eligibility contain incorrect information, and/or SNAP applicants and recipients fail to receive proper notices. For example, in the Federal Fiscal Year (FFY) 2018 Local Program Access Review (PAR), Food and Nutrition Service (FNS) cited that SNAP applicants did not receive a Notice of Eligibility or notice contained incorrect information, no notice of required verification, and the notice of adverse action was incorrect.
2. Untimely Processing of SNAP Applications and Periodic Reports - On October 23, 2017, FNS advised DHS that its application processing timeliness (APT) rate between October 2016 and March 2017 was 88.45%, which triggered corrective action per FNS policy. Moreover, between that last APT report and now, DHS has disclosed that it has experienced processing backlogs of varying severity and persistence to FNS via ongoing communications and as part of waiver requests. DHS also provided a report to FNS in August 2022 that indicated significant application processing backlogs.
3. Establishment of Duplicate Accounts - DHS discovered that duplicate Product Delivery Cases (PDC) were being created in DCAS. One PDC was active and the other closed, but the closed PDC was still receiving benefits.
4. Issuance of Duplicate Payment - As a result of duplicate accounts in Deficiency 3, duplicate payments may have been issued to the same household when a caseworker reactivated a closed case. There is also a possibility that customers who received duplicate EBT cards from different EBT vendors may have received duplicate payments.
5. Failure to Implement Computer Matching System - Based on the FFY18 Program Integrity Management Evaluation (ME) review, DHS failed to process Prisoner Verification System (PVS) matches, deceased matches, and National Directory of New Hires (NDNH) matches in accordance with federal requirements.
6. Failure to Produce System Computations to Support Recipient Claims - DCAS does not have the ability to calculate overpayments or send a demand letter. FNS correspondence letters dated October 18, 2017, and September 20, 2018, advised DHS to suspend the establishment of DCAS claims but allowed DHS to continue servicing ACEDS claims.
7. Recipient Fraud Investigations, Hearings and Tracking System Unvalidated - As reported by DHS in the Advance Warning Letter (AWL) CAP, DHS has been using manual and other electronic systems, such as QuickBase, to meet federal recipient fraud requirements and related notices. Since then, DHS has been working on creating a fraud management system called Thomas Reuters (formerly Pondera), which went live on October 11, 2022. This finding remains open until FNS validates the system, including viewing a demo.
8. Treasury Offset Program (TOP) Reporting and Maintenance Decertified - FNS conducted a TOP Technical Review in June 2021 and DHS was decertified from TOP due to the following:
• Referral of customers to TOP that are undergoing recoupment.
• Incorrect determination of the date of delinquency.
• Incorrect debt balance and debt status in TOP.
9. Failure to Initiate Recoupment on Active Households - When DCAS launched in October 2016, more than 3,000 claim cases with outstanding balances originating from SNAP overpayments were converted from ACEDS to DCAS. Some claims were not properly converted or activated in DCAS. As a result, DHS failed to take the required recovery actions, including TOP recovery or activation of the recoupment process through EBT cards.
10. Recipient and Benefit Integrity Report Update Required - DHS must provide an update on the target completion dates for system generation of all SNAP-related reports currently being created through manual intervention. The plan must include the procedures for reviewing and ensuring the accuracy of the data being submitted to Food Programs Reporting System (FPRS) with particular emphasis on the FNS-209 and the FNS-366B reports. DHS experienced some technical challenges in processing and retrieving claim and recoupment information accurately since the launch of DCAS in October 2016, which affected the FNS-209 quarterly reports. The Payment and Collections Division (PCD) and the DCAS report development team have made concerted efforts to improve the ability to generate data for the reports but continue to have difficulties in verifying the accuracy of data due in part to the laborious manual processes involved. Based on the FFY 2018 Program Integrity ME review, lines 3b, 10, and 14 of the FNS-209 failed to reconcile with the detailed documentation.
11. Work Requirements Have Not Been Properly Implemented - DHS is not in compliance with the requirement to accurately report on the FNS 583. DHS is unprepared to implement the work requirement and time limit for able-bodied adults without dependents when the current suspension mandated by the Families First Coronavirus Response Act ends and/or its waiver ends. Additionally, the District is not prepared to apply the Able-Bodied Adults Without Dependents (ABAWD) time limits when their ABAWD waiver expires.
12. Minimum Benefit for Non-Categorically Eligible One/Two Person Households Not Issued to Eligible Households - As reported by DHS, the Federal minimum SNAP benefit is not issued to eligible one or two-person households unless those households are categorically eligible. As a result, one or two-person households that are not categorically eligible will not receive benefits to which they are entitled.
13. Medical Expense Deduction for Elderly and Disabled Households Not Configured in DCAS - As reported by DHS, certain allowable medical expense evidence is not configured in DCAS to allow a medical expense deduction. Certain allowable disability statuses selected in DCAS are not configured to allow a medical expense deduction. As a result, certain households with elderly or disabled members are not receiving a medical expense deduction.
14. Failure to Analyze Client Complaints and Include in the State’s Corrective Action Plans (CAP) Where Appropriate - DHS is failing to analyze client complaints and include in the State’s CAP where appropriate, per 7 CFR 271.6(a)(3) and 275.16.
15. The SNAP Application Does Not Clearly Explain Which Questions Are Required for SNAP - FNS reviewers found that the District’s SNAP application does not provide clear directions about which questions are required for SNAP, versus Cash or Medical Assistance. For example, Step 5 of the application asks “Does anyone in your household (including non-applicants) have any income? Yes – complete below; No – skip to step 6 (Complete if you are applying for Food, Medical, or Cash Assistance).” The directions are confusing and may be difficult to understand.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements resulting from a system implementation.
Effect – Without an effectively designed and operated system in place, ineligible beneficiaries may receive benefits under the SNAP grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Inaccurate beneficiary allotment payments could result in participants receiving benefits that they are not entitled to receive under the program.
Cause – DHS did not effectively design and operate the ADP system for SNAP which resulted to inaccurate benefit payments.
Recommendation – We recommend that DHS continue to evaluate and improve the new ADP system for SNAP to ensure that it addresses all the administration requirements of the SNAP program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS and DHCF DCAS team agree with the findings noted in this report. DHS self-reported these findings as part of the agency’s ongoing effort to maintain integrity with all eligibility determinations. The root cause of each of the fifteen (15) case issues with the ADP system for SNAP varied. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-004
Prior Year Finding Number: 2022-002
Compliance Requirement: Special Tests and Provisions – EBT Card Security
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Office of the Chief Financial Officer/Office of Finance and Treasury (OCFO/OFT)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR Section 274.8(b)(3), As an addition to or component of the Security Program required of Automated Data Processing (ADP) systems, the State agency shall ensure that the following electronic benefits transfer (EBT) security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center;
(iii) Message validation;
(iv) Administrative and operational procedures;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for ADP systems. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system – (B) Completeness and timeliness of the reconciliation system; and
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
Condition – OCFO/OFT for DHS are required to maintain adequate security over, and documentation/records for EBT cards, to prevent their theft, embezzlement, loss damage, destruction, unauthorized transfer, negotiation, or use. OCFO/OFT have contracted with Fidelity National Information Service (FIS) for the issuance and security of the EBT cards; however, it is OCFO/OFT’s ultimate responsibility to ensure the contractor has controls in place to maintain adequate security over, and documentation/records of EBT cards. During our tests of the design and implementation of internal controls, we noted the following issues:
• For nine (9) out of the 60 samples, although both EBT Balance Sheets reconciled with the EBT Card Issuance Logs included in the package, we noted the following deficiencies:
o For one (1) out of the samples, we noted that for at least one (1) customer, the client’s name was missing from the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer on the United Planning Organization (UPO) Intake Form, the ID type for identification purposes was missing.
o For two (2) out of the samples, we noted that for at least one (1) customer the case number was cancelled but no new/correct case number indicated on the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer the identification type was noted as referral on the EBT Intake Form, but no referral form was attached.
o For one (1) out of the samples, we noted that for at least one (1) customer the DHS Photo ID Program Referral Form was missing the supervisor's signature and only had the eligibility staff’s signature.
o For one (1) out of the samples, we noted that for at least one (1) customer, the name of the beneficiary in the intake forms does not agree with the EBT Issuance Log.
Questioned Costs – None.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without adequate internal controls to ensure compliance with EBT Card Security requirements, there is an increased risk that the inventory of EBT cards will not be properly maintained and accounted for.
Cause – OCFO/OFT for DHS does not have adequate policies and procedures in place to ensure adequate safeguarding, documentation over issuance and monitoring of EBT cards.
Recommendation - We recommend that OCFO/OFT for DHS strengthen formal policies and procedures to maintain adequate security over, and documentation/records for EBT Cards.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The OCFO/OFT for DHS concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-001
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet.
Questioned Costs – Known amount is $28,093.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809.
Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-002
Prior Year Finding Number: N/A
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 277.4(b), Federal reimbursement rate, states that the base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
Condition – During the testing of the SNAP Matching, Level of Effort, Earmarking compliance requirement, we noted that the quarterly SF-425 reports were approved and certified, and DHS/ESA exceeded the required SNAP Matching amount of $34,983,777. However, OCFO for DHS/ESA was unable to provide supporting documentation that would allow us to agree specific amounts reported as the match for fiscal year 2023.
OCFO for DHS/ESA was unable to provide support to enable recalculation of the exact amounts reported for (1) Certification for the 4th quarter, (2) Education and Training (E&T) 50% Grant for each of the four quarters, and (3) for New Investment for the 4th quarter, which is not allowed to be included as a match but must be spent by the agency. The total calculated amount by OCFO for DHS/ESA to be reported as the required match on the SF-425 report, excluding New investment, was $36,603,773. However, the total recalculated amount by auditors to be reported as the required match was $37,315,738. Variance between these two amounts was $711,965.
Questioned Costs – None.
Context – This is a condition identified per review of DHS/ESA’s compliance through the OCFO team with specified requirements using a statistically valid sample.
Effect – OCFO for DHS/ESA is not in compliance with the stated provisions. Without adequate internal controls to ensure reconciliation of the amounts reported for the matching requirements, there is an increased risk that matching will not be properly reported.
Cause – OCFO for DHS/ESA does not have appear to have adequate policies and procedures in place to ensure that the amounts reported for the matching requirement agreed to the support.
Recommendation – We recommend that OCFO for DHS/ESA strengthen its policies and procedures to ensure that amounts reported for SNAP matching requirements are properly reported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-003
Prior Year Finding Number: 2022-001
Compliance Requirement: Special Tests and Provisions – ADP System for SNAP
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Department of Health Care Finance (DHCF) DC Access System (DCAS) Program Management Administration
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 272.10(a), “All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP.”
Per 2 CFR Section 272.10(b), “In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas (1) Certification and (2) Issuance Reconciliation and Reporting. Under Certification – States agencies must determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Also, State agencies must redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances.”
Condition – The District is self-reporting findings it noted from its ongoing efforts to resolve issues with the ADP system for SNAP. The issues identified and the estimated impact follows:
1. Failure to Send Correct and Timely Notices to SNAP Households - Notices pertaining to SNAP eligibility contain incorrect information, and/or SNAP applicants and recipients fail to receive proper notices. For example, in the Federal Fiscal Year (FFY) 2018 Local Program Access Review (PAR), Food and Nutrition Service (FNS) cited that SNAP applicants did not receive a Notice of Eligibility or notice contained incorrect information, no notice of required verification, and the notice of adverse action was incorrect.
2. Untimely Processing of SNAP Applications and Periodic Reports - On October 23, 2017, FNS advised DHS that its application processing timeliness (APT) rate between October 2016 and March 2017 was 88.45%, which triggered corrective action per FNS policy. Moreover, between that last APT report and now, DHS has disclosed that it has experienced processing backlogs of varying severity and persistence to FNS via ongoing communications and as part of waiver requests. DHS also provided a report to FNS in August 2022 that indicated significant application processing backlogs.
3. Establishment of Duplicate Accounts - DHS discovered that duplicate Product Delivery Cases (PDC) were being created in DCAS. One PDC was active and the other closed, but the closed PDC was still receiving benefits.
4. Issuance of Duplicate Payment - As a result of duplicate accounts in Deficiency 3, duplicate payments may have been issued to the same household when a caseworker reactivated a closed case. There is also a possibility that customers who received duplicate EBT cards from different EBT vendors may have received duplicate payments.
5. Failure to Implement Computer Matching System - Based on the FFY18 Program Integrity Management Evaluation (ME) review, DHS failed to process Prisoner Verification System (PVS) matches, deceased matches, and National Directory of New Hires (NDNH) matches in accordance with federal requirements.
6. Failure to Produce System Computations to Support Recipient Claims - DCAS does not have the ability to calculate overpayments or send a demand letter. FNS correspondence letters dated October 18, 2017, and September 20, 2018, advised DHS to suspend the establishment of DCAS claims but allowed DHS to continue servicing ACEDS claims.
7. Recipient Fraud Investigations, Hearings and Tracking System Unvalidated - As reported by DHS in the Advance Warning Letter (AWL) CAP, DHS has been using manual and other electronic systems, such as QuickBase, to meet federal recipient fraud requirements and related notices. Since then, DHS has been working on creating a fraud management system called Thomas Reuters (formerly Pondera), which went live on October 11, 2022. This finding remains open until FNS validates the system, including viewing a demo.
8. Treasury Offset Program (TOP) Reporting and Maintenance Decertified - FNS conducted a TOP Technical Review in June 2021 and DHS was decertified from TOP due to the following:
• Referral of customers to TOP that are undergoing recoupment.
• Incorrect determination of the date of delinquency.
• Incorrect debt balance and debt status in TOP.
9. Failure to Initiate Recoupment on Active Households - When DCAS launched in October 2016, more than 3,000 claim cases with outstanding balances originating from SNAP overpayments were converted from ACEDS to DCAS. Some claims were not properly converted or activated in DCAS. As a result, DHS failed to take the required recovery actions, including TOP recovery or activation of the recoupment process through EBT cards.
10. Recipient and Benefit Integrity Report Update Required - DHS must provide an update on the target completion dates for system generation of all SNAP-related reports currently being created through manual intervention. The plan must include the procedures for reviewing and ensuring the accuracy of the data being submitted to Food Programs Reporting System (FPRS) with particular emphasis on the FNS-209 and the FNS-366B reports. DHS experienced some technical challenges in processing and retrieving claim and recoupment information accurately since the launch of DCAS in October 2016, which affected the FNS-209 quarterly reports. The Payment and Collections Division (PCD) and the DCAS report development team have made concerted efforts to improve the ability to generate data for the reports but continue to have difficulties in verifying the accuracy of data due in part to the laborious manual processes involved. Based on the FFY 2018 Program Integrity ME review, lines 3b, 10, and 14 of the FNS-209 failed to reconcile with the detailed documentation.
11. Work Requirements Have Not Been Properly Implemented - DHS is not in compliance with the requirement to accurately report on the FNS 583. DHS is unprepared to implement the work requirement and time limit for able-bodied adults without dependents when the current suspension mandated by the Families First Coronavirus Response Act ends and/or its waiver ends. Additionally, the District is not prepared to apply the Able-Bodied Adults Without Dependents (ABAWD) time limits when their ABAWD waiver expires.
12. Minimum Benefit for Non-Categorically Eligible One/Two Person Households Not Issued to Eligible Households - As reported by DHS, the Federal minimum SNAP benefit is not issued to eligible one or two-person households unless those households are categorically eligible. As a result, one or two-person households that are not categorically eligible will not receive benefits to which they are entitled.
13. Medical Expense Deduction for Elderly and Disabled Households Not Configured in DCAS - As reported by DHS, certain allowable medical expense evidence is not configured in DCAS to allow a medical expense deduction. Certain allowable disability statuses selected in DCAS are not configured to allow a medical expense deduction. As a result, certain households with elderly or disabled members are not receiving a medical expense deduction.
14. Failure to Analyze Client Complaints and Include in the State’s Corrective Action Plans (CAP) Where Appropriate - DHS is failing to analyze client complaints and include in the State’s CAP where appropriate, per 7 CFR 271.6(a)(3) and 275.16.
15. The SNAP Application Does Not Clearly Explain Which Questions Are Required for SNAP - FNS reviewers found that the District’s SNAP application does not provide clear directions about which questions are required for SNAP, versus Cash or Medical Assistance. For example, Step 5 of the application asks “Does anyone in your household (including non-applicants) have any income? Yes – complete below; No – skip to step 6 (Complete if you are applying for Food, Medical, or Cash Assistance).” The directions are confusing and may be difficult to understand.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements resulting from a system implementation.
Effect – Without an effectively designed and operated system in place, ineligible beneficiaries may receive benefits under the SNAP grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Inaccurate beneficiary allotment payments could result in participants receiving benefits that they are not entitled to receive under the program.
Cause – DHS did not effectively design and operate the ADP system for SNAP which resulted to inaccurate benefit payments.
Recommendation – We recommend that DHS continue to evaluate and improve the new ADP system for SNAP to ensure that it addresses all the administration requirements of the SNAP program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS and DHCF DCAS team agree with the findings noted in this report. DHS self-reported these findings as part of the agency’s ongoing effort to maintain integrity with all eligibility determinations. The root cause of each of the fifteen (15) case issues with the ADP system for SNAP varied. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-004
Prior Year Finding Number: 2022-002
Compliance Requirement: Special Tests and Provisions – EBT Card Security
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Office of the Chief Financial Officer/Office of Finance and Treasury (OCFO/OFT)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR Section 274.8(b)(3), As an addition to or component of the Security Program required of Automated Data Processing (ADP) systems, the State agency shall ensure that the following electronic benefits transfer (EBT) security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center;
(iii) Message validation;
(iv) Administrative and operational procedures;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for ADP systems. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system – (B) Completeness and timeliness of the reconciliation system; and
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
Condition – OCFO/OFT for DHS are required to maintain adequate security over, and documentation/records for EBT cards, to prevent their theft, embezzlement, loss damage, destruction, unauthorized transfer, negotiation, or use. OCFO/OFT have contracted with Fidelity National Information Service (FIS) for the issuance and security of the EBT cards; however, it is OCFO/OFT’s ultimate responsibility to ensure the contractor has controls in place to maintain adequate security over, and documentation/records of EBT cards. During our tests of the design and implementation of internal controls, we noted the following issues:
• For nine (9) out of the 60 samples, although both EBT Balance Sheets reconciled with the EBT Card Issuance Logs included in the package, we noted the following deficiencies:
o For one (1) out of the samples, we noted that for at least one (1) customer, the client’s name was missing from the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer on the United Planning Organization (UPO) Intake Form, the ID type for identification purposes was missing.
o For two (2) out of the samples, we noted that for at least one (1) customer the case number was cancelled but no new/correct case number indicated on the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer the identification type was noted as referral on the EBT Intake Form, but no referral form was attached.
o For one (1) out of the samples, we noted that for at least one (1) customer the DHS Photo ID Program Referral Form was missing the supervisor's signature and only had the eligibility staff’s signature.
o For one (1) out of the samples, we noted that for at least one (1) customer, the name of the beneficiary in the intake forms does not agree with the EBT Issuance Log.
Questioned Costs – None.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without adequate internal controls to ensure compliance with EBT Card Security requirements, there is an increased risk that the inventory of EBT cards will not be properly maintained and accounted for.
Cause – OCFO/OFT for DHS does not have adequate policies and procedures in place to ensure adequate safeguarding, documentation over issuance and monitoring of EBT cards.
Recommendation - We recommend that OCFO/OFT for DHS strengthen formal policies and procedures to maintain adequate security over, and documentation/records for EBT Cards.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The OCFO/OFT for DHS concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-001
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet.
Questioned Costs – Known amount is $28,093.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809.
Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-002
Prior Year Finding Number: N/A
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 277.4(b), Federal reimbursement rate, states that the base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
Condition – During the testing of the SNAP Matching, Level of Effort, Earmarking compliance requirement, we noted that the quarterly SF-425 reports were approved and certified, and DHS/ESA exceeded the required SNAP Matching amount of $34,983,777. However, OCFO for DHS/ESA was unable to provide supporting documentation that would allow us to agree specific amounts reported as the match for fiscal year 2023.
OCFO for DHS/ESA was unable to provide support to enable recalculation of the exact amounts reported for (1) Certification for the 4th quarter, (2) Education and Training (E&T) 50% Grant for each of the four quarters, and (3) for New Investment for the 4th quarter, which is not allowed to be included as a match but must be spent by the agency. The total calculated amount by OCFO for DHS/ESA to be reported as the required match on the SF-425 report, excluding New investment, was $36,603,773. However, the total recalculated amount by auditors to be reported as the required match was $37,315,738. Variance between these two amounts was $711,965.
Questioned Costs – None.
Context – This is a condition identified per review of DHS/ESA’s compliance through the OCFO team with specified requirements using a statistically valid sample.
Effect – OCFO for DHS/ESA is not in compliance with the stated provisions. Without adequate internal controls to ensure reconciliation of the amounts reported for the matching requirements, there is an increased risk that matching will not be properly reported.
Cause – OCFO for DHS/ESA does not have appear to have adequate policies and procedures in place to ensure that the amounts reported for the matching requirement agreed to the support.
Recommendation – We recommend that OCFO for DHS/ESA strengthen its policies and procedures to ensure that amounts reported for SNAP matching requirements are properly reported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-003
Prior Year Finding Number: 2022-001
Compliance Requirement: Special Tests and Provisions – ADP System for SNAP
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Department of Health Care Finance (DHCF) DC Access System (DCAS) Program Management Administration
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 272.10(a), “All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP.”
Per 2 CFR Section 272.10(b), “In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas (1) Certification and (2) Issuance Reconciliation and Reporting. Under Certification – States agencies must determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Also, State agencies must redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances.”
Condition – The District is self-reporting findings it noted from its ongoing efforts to resolve issues with the ADP system for SNAP. The issues identified and the estimated impact follows:
1. Failure to Send Correct and Timely Notices to SNAP Households - Notices pertaining to SNAP eligibility contain incorrect information, and/or SNAP applicants and recipients fail to receive proper notices. For example, in the Federal Fiscal Year (FFY) 2018 Local Program Access Review (PAR), Food and Nutrition Service (FNS) cited that SNAP applicants did not receive a Notice of Eligibility or notice contained incorrect information, no notice of required verification, and the notice of adverse action was incorrect.
2. Untimely Processing of SNAP Applications and Periodic Reports - On October 23, 2017, FNS advised DHS that its application processing timeliness (APT) rate between October 2016 and March 2017 was 88.45%, which triggered corrective action per FNS policy. Moreover, between that last APT report and now, DHS has disclosed that it has experienced processing backlogs of varying severity and persistence to FNS via ongoing communications and as part of waiver requests. DHS also provided a report to FNS in August 2022 that indicated significant application processing backlogs.
3. Establishment of Duplicate Accounts - DHS discovered that duplicate Product Delivery Cases (PDC) were being created in DCAS. One PDC was active and the other closed, but the closed PDC was still receiving benefits.
4. Issuance of Duplicate Payment - As a result of duplicate accounts in Deficiency 3, duplicate payments may have been issued to the same household when a caseworker reactivated a closed case. There is also a possibility that customers who received duplicate EBT cards from different EBT vendors may have received duplicate payments.
5. Failure to Implement Computer Matching System - Based on the FFY18 Program Integrity Management Evaluation (ME) review, DHS failed to process Prisoner Verification System (PVS) matches, deceased matches, and National Directory of New Hires (NDNH) matches in accordance with federal requirements.
6. Failure to Produce System Computations to Support Recipient Claims - DCAS does not have the ability to calculate overpayments or send a demand letter. FNS correspondence letters dated October 18, 2017, and September 20, 2018, advised DHS to suspend the establishment of DCAS claims but allowed DHS to continue servicing ACEDS claims.
7. Recipient Fraud Investigations, Hearings and Tracking System Unvalidated - As reported by DHS in the Advance Warning Letter (AWL) CAP, DHS has been using manual and other electronic systems, such as QuickBase, to meet federal recipient fraud requirements and related notices. Since then, DHS has been working on creating a fraud management system called Thomas Reuters (formerly Pondera), which went live on October 11, 2022. This finding remains open until FNS validates the system, including viewing a demo.
8. Treasury Offset Program (TOP) Reporting and Maintenance Decertified - FNS conducted a TOP Technical Review in June 2021 and DHS was decertified from TOP due to the following:
• Referral of customers to TOP that are undergoing recoupment.
• Incorrect determination of the date of delinquency.
• Incorrect debt balance and debt status in TOP.
9. Failure to Initiate Recoupment on Active Households - When DCAS launched in October 2016, more than 3,000 claim cases with outstanding balances originating from SNAP overpayments were converted from ACEDS to DCAS. Some claims were not properly converted or activated in DCAS. As a result, DHS failed to take the required recovery actions, including TOP recovery or activation of the recoupment process through EBT cards.
10. Recipient and Benefit Integrity Report Update Required - DHS must provide an update on the target completion dates for system generation of all SNAP-related reports currently being created through manual intervention. The plan must include the procedures for reviewing and ensuring the accuracy of the data being submitted to Food Programs Reporting System (FPRS) with particular emphasis on the FNS-209 and the FNS-366B reports. DHS experienced some technical challenges in processing and retrieving claim and recoupment information accurately since the launch of DCAS in October 2016, which affected the FNS-209 quarterly reports. The Payment and Collections Division (PCD) and the DCAS report development team have made concerted efforts to improve the ability to generate data for the reports but continue to have difficulties in verifying the accuracy of data due in part to the laborious manual processes involved. Based on the FFY 2018 Program Integrity ME review, lines 3b, 10, and 14 of the FNS-209 failed to reconcile with the detailed documentation.
11. Work Requirements Have Not Been Properly Implemented - DHS is not in compliance with the requirement to accurately report on the FNS 583. DHS is unprepared to implement the work requirement and time limit for able-bodied adults without dependents when the current suspension mandated by the Families First Coronavirus Response Act ends and/or its waiver ends. Additionally, the District is not prepared to apply the Able-Bodied Adults Without Dependents (ABAWD) time limits when their ABAWD waiver expires.
12. Minimum Benefit for Non-Categorically Eligible One/Two Person Households Not Issued to Eligible Households - As reported by DHS, the Federal minimum SNAP benefit is not issued to eligible one or two-person households unless those households are categorically eligible. As a result, one or two-person households that are not categorically eligible will not receive benefits to which they are entitled.
13. Medical Expense Deduction for Elderly and Disabled Households Not Configured in DCAS - As reported by DHS, certain allowable medical expense evidence is not configured in DCAS to allow a medical expense deduction. Certain allowable disability statuses selected in DCAS are not configured to allow a medical expense deduction. As a result, certain households with elderly or disabled members are not receiving a medical expense deduction.
14. Failure to Analyze Client Complaints and Include in the State’s Corrective Action Plans (CAP) Where Appropriate - DHS is failing to analyze client complaints and include in the State’s CAP where appropriate, per 7 CFR 271.6(a)(3) and 275.16.
15. The SNAP Application Does Not Clearly Explain Which Questions Are Required for SNAP - FNS reviewers found that the District’s SNAP application does not provide clear directions about which questions are required for SNAP, versus Cash or Medical Assistance. For example, Step 5 of the application asks “Does anyone in your household (including non-applicants) have any income? Yes – complete below; No – skip to step 6 (Complete if you are applying for Food, Medical, or Cash Assistance).” The directions are confusing and may be difficult to understand.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements resulting from a system implementation.
Effect – Without an effectively designed and operated system in place, ineligible beneficiaries may receive benefits under the SNAP grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Inaccurate beneficiary allotment payments could result in participants receiving benefits that they are not entitled to receive under the program.
Cause – DHS did not effectively design and operate the ADP system for SNAP which resulted to inaccurate benefit payments.
Recommendation – We recommend that DHS continue to evaluate and improve the new ADP system for SNAP to ensure that it addresses all the administration requirements of the SNAP program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS and DHCF DCAS team agree with the findings noted in this report. DHS self-reported these findings as part of the agency’s ongoing effort to maintain integrity with all eligibility determinations. The root cause of each of the fifteen (15) case issues with the ADP system for SNAP varied. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-004
Prior Year Finding Number: 2022-002
Compliance Requirement: Special Tests and Provisions – EBT Card Security
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Office of the Chief Financial Officer/Office of Finance and Treasury (OCFO/OFT)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR Section 274.8(b)(3), As an addition to or component of the Security Program required of Automated Data Processing (ADP) systems, the State agency shall ensure that the following electronic benefits transfer (EBT) security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center;
(iii) Message validation;
(iv) Administrative and operational procedures;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for ADP systems. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system – (B) Completeness and timeliness of the reconciliation system; and
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
Condition – OCFO/OFT for DHS are required to maintain adequate security over, and documentation/records for EBT cards, to prevent their theft, embezzlement, loss damage, destruction, unauthorized transfer, negotiation, or use. OCFO/OFT have contracted with Fidelity National Information Service (FIS) for the issuance and security of the EBT cards; however, it is OCFO/OFT’s ultimate responsibility to ensure the contractor has controls in place to maintain adequate security over, and documentation/records of EBT cards. During our tests of the design and implementation of internal controls, we noted the following issues:
• For nine (9) out of the 60 samples, although both EBT Balance Sheets reconciled with the EBT Card Issuance Logs included in the package, we noted the following deficiencies:
o For one (1) out of the samples, we noted that for at least one (1) customer, the client’s name was missing from the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer on the United Planning Organization (UPO) Intake Form, the ID type for identification purposes was missing.
o For two (2) out of the samples, we noted that for at least one (1) customer the case number was cancelled but no new/correct case number indicated on the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer the identification type was noted as referral on the EBT Intake Form, but no referral form was attached.
o For one (1) out of the samples, we noted that for at least one (1) customer the DHS Photo ID Program Referral Form was missing the supervisor's signature and only had the eligibility staff’s signature.
o For one (1) out of the samples, we noted that for at least one (1) customer, the name of the beneficiary in the intake forms does not agree with the EBT Issuance Log.
Questioned Costs – None.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without adequate internal controls to ensure compliance with EBT Card Security requirements, there is an increased risk that the inventory of EBT cards will not be properly maintained and accounted for.
Cause – OCFO/OFT for DHS does not have adequate policies and procedures in place to ensure adequate safeguarding, documentation over issuance and monitoring of EBT cards.
Recommendation - We recommend that OCFO/OFT for DHS strengthen formal policies and procedures to maintain adequate security over, and documentation/records for EBT Cards.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The OCFO/OFT for DHS concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-005
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Condition – From a sample of 40 payroll transactions, we noted five (5) transactions for one employee that did not work on the program, thus, there should be no hours charged to the program during the year. Per review of the total payroll charged to the program for the year for this employee, we noted $32,290 that should not have been charged to the program.
Questioned Costs – Known amount is $32,290.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the WIC program in fiscal year 2023 were $1,073,965.
Effect – DC Health was unable to demonstrate that the payroll expenditures charged to the WIC program were allowable expenses in accordance with 2 CFR Part 200.430.
Cause – DC Health did not adhere to its internal control policies and procedures for reviewing the eligibility and allowability of payroll expenditures charged to the WIC program.
Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that only allowable expenses are charged to the program as required by 2 CFR 200.430.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. DC Health complies with local and federal requirements for regular and routine review of budgeted employee time and alignment with allowable costs and hours worked. Staff duties are documented in performance plans, SMART goals, logs/calendars and reports revised by supervisors. The exception found in the sample was corrected in January 2024 when the employee was found to be budgeted partly on the WIC grant. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-006
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR 246.16a (c) Rebate contracts with infant formula manufacturers are authorized as a cost containment measure. Rebates represent a reduction of expenditures previously incurred for WIC food benefit costs. Applying the rebates received to such costs enabled the DC Health to extend program benefits to more participants than could have been serviced this fiscal year in the absence of the rebate contract.
Condition – During our review of five (5) rebate samples, we found that for one (1) rebate amounting to $4,639, DC Health was unable to provide the invoice to support the rebate credit received in October 2022.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. We sampled $1,085,404 of the population of $3,351,591.
Effect – Without strict adherence to policies and procedures, there is no assurance that food rebates are accurately reviewed and approved before being claimed for credit.
Cause – DC Health did not follow its own internal control policies and procedures for reviewing rebates submitted for credit.
Recommendation – We recommend that DC Health strictly adhere to its policies and procedures to ensure that rebates are reviewed and approved before claiming for credit.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. Contributing factors include absence of an internal policy and procedure outlining the annual process for the service provider, to submit supporting documentation to DC WIC for review and approval prior to receipt of the annual rebate. This internal control would have alerted WIC staff to contact the service provider last year, when they did not email a cover letter to DC WIC as supporting documentation for the annual vendor’s rebate. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-007
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR § 246.7 - Certification of participants:
“246.7 (d)(v) - (v) Are applicants required to document income eligibility?
(A) Adjunctively/automatically income eligible applicants. The State or local agency must require applicants determined to be adjunctively or automatically income eligible to document their eligibility for the program that makes them income eligible as set forth in paragraph (d)(2)(vi) of this section.
(B) Other applicants. The State or local agency must require all other applicants to provide documentation of family income at certification.”
Condition – During testing over individual eligibility for the WIC program benefits, we noted the following exception:
• BDO identified one (1) instance out of forty (40) samples where "COVID Self-declared" was accepted as proof of income for determining eligibility under the WIC program, which is no longer valid for income determination.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample.
Effect – Due to lack of operating effectiveness of controls and non-compliance with program requirements, there is no assurance over income eligibility under the WIC program for individual participants.
Cause – DC Health did not adhere to the required internal control procedures over income eligibility determinations to ensure that certifications are issued to eligible individuals.
Recommendation – We recommend that DC Health implement internal control procedures to ensure income eligibility determinations are made accurately in compliance with the program requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. The internal control deficiencies identified are a result of a combination of grantee staff turnover, change in federal WIC policy after the end of the public health emergency and the continued existence of pandemic era terminology in DC WIC’s management information system. In fiscal year 2024, The DC WIC Program implemented several quality assurance activities that are aimed at resetting the program back to normal operations pre-pandemic. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-005
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Condition – From a sample of 40 payroll transactions, we noted five (5) transactions for one employee that did not work on the program, thus, there should be no hours charged to the program during the year. Per review of the total payroll charged to the program for the year for this employee, we noted $32,290 that should not have been charged to the program.
Questioned Costs – Known amount is $32,290.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the WIC program in fiscal year 2023 were $1,073,965.
Effect – DC Health was unable to demonstrate that the payroll expenditures charged to the WIC program were allowable expenses in accordance with 2 CFR Part 200.430.
Cause – DC Health did not adhere to its internal control policies and procedures for reviewing the eligibility and allowability of payroll expenditures charged to the WIC program.
Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that only allowable expenses are charged to the program as required by 2 CFR 200.430.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. DC Health complies with local and federal requirements for regular and routine review of budgeted employee time and alignment with allowable costs and hours worked. Staff duties are documented in performance plans, SMART goals, logs/calendars and reports revised by supervisors. The exception found in the sample was corrected in January 2024 when the employee was found to be budgeted partly on the WIC grant. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-006
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR 246.16a (c) Rebate contracts with infant formula manufacturers are authorized as a cost containment measure. Rebates represent a reduction of expenditures previously incurred for WIC food benefit costs. Applying the rebates received to such costs enabled the DC Health to extend program benefits to more participants than could have been serviced this fiscal year in the absence of the rebate contract.
Condition – During our review of five (5) rebate samples, we found that for one (1) rebate amounting to $4,639, DC Health was unable to provide the invoice to support the rebate credit received in October 2022.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. We sampled $1,085,404 of the population of $3,351,591.
Effect – Without strict adherence to policies and procedures, there is no assurance that food rebates are accurately reviewed and approved before being claimed for credit.
Cause – DC Health did not follow its own internal control policies and procedures for reviewing rebates submitted for credit.
Recommendation – We recommend that DC Health strictly adhere to its policies and procedures to ensure that rebates are reviewed and approved before claiming for credit.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. Contributing factors include absence of an internal policy and procedure outlining the annual process for the service provider, to submit supporting documentation to DC WIC for review and approval prior to receipt of the annual rebate. This internal control would have alerted WIC staff to contact the service provider last year, when they did not email a cover letter to DC WIC as supporting documentation for the annual vendor’s rebate. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-007
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR § 246.7 - Certification of participants:
“246.7 (d)(v) - (v) Are applicants required to document income eligibility?
(A) Adjunctively/automatically income eligible applicants. The State or local agency must require applicants determined to be adjunctively or automatically income eligible to document their eligibility for the program that makes them income eligible as set forth in paragraph (d)(2)(vi) of this section.
(B) Other applicants. The State or local agency must require all other applicants to provide documentation of family income at certification.”
Condition – During testing over individual eligibility for the WIC program benefits, we noted the following exception:
• BDO identified one (1) instance out of forty (40) samples where "COVID Self-declared" was accepted as proof of income for determining eligibility under the WIC program, which is no longer valid for income determination.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample.
Effect – Due to lack of operating effectiveness of controls and non-compliance with program requirements, there is no assurance over income eligibility under the WIC program for individual participants.
Cause – DC Health did not adhere to the required internal control procedures over income eligibility determinations to ensure that certifications are issued to eligible individuals.
Recommendation – We recommend that DC Health implement internal control procedures to ensure income eligibility determinations are made accurately in compliance with the program requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. The internal control deficiencies identified are a result of a combination of grantee staff turnover, change in federal WIC policy after the end of the public health emergency and the continued existence of pandemic era terminology in DC WIC’s management information system. In fiscal year 2024, The DC WIC Program implemented several quality assurance activities that are aimed at resetting the program back to normal operations pre-pandemic. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-008
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Housing and Urban Development
Community Development Block Grants Section 108 Loan Guarantees
ALN: 14.248
Award #: 2000150
Award Year: 10/01/2022 – 09/30/2023 Department of Housing and
Community Development (DHCD)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
2 CFR Part 170 Appendix A, “Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency (see definitions in paragraph e. of this award term). The non-Federal entity or Federal agency must report each obligating action described in paragraph a.1. of this award term to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify.”
Condition – During our audit, we noted the Agency did not submit the required Federal Financial Assistance Subject to the Transparency Act (FFATA) Report through Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) website.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCD’s compliance with specified requirements.
Effect – Failure to properly submit the FFATA report results in noncompliance for the Community Development Block Grants Section 108 Loan Guarantees program.
Cause – Per discussion with Grants Manager and Compliance Officer, DHCD was unable to enter the data into FSRS as a result of a system error. In lieu of reporting to FSRS, DHCD keeps track of the FFATA amounts by memo and aging schedule approved by Agency Fiscal Officer.
Recommendation – We recommend that DHCD resolve issues preventing them from properly submitting the FFATA Report through FSRS.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the conditions and recommendations of this finding. DHCD could not submit its Community Development Block Grants Section 108 Loan Guarantees program FFATA Report in the FSRS. The District’s Department of Human Services (DHS)’ Data Universal Numbering System (DUNS)/Unique Entity (UEI) number was used on all District’s Housing and Urban Development (HUD) grant agreements for the fiscal year. DHCD notified HUD Field Office of the error, which was corrected on the District’s fiscal year 2024 federal grant agreements with HUD. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-009
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Labor
Unemployment Insurance
ALN: 17.225
Award #: UI-37216-22-55-A-11
Award Year: 10/01/2021 – 12/31/2024 Department of Employment Services (DOES)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 200.510(b), Schedule of Expenditures of Federal awards, states that the auditee must also 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 2 CFR section 200.502, Basis for determining Federal Awards expended.
Condition – During our review of grant carryover analysis in relation to the fiscal year 2023 audit, we noted that DOES recorded $3.3 million of federal administrative expenditures in the current year SEFA in excess of the overall grant award amount for Unemployment Insurance program Award #UI-37216-22-55-A-11. BDO noted that the amount is related to the year-end closing entry reconciling DIFS R100 vs. R51 and should have been reversed in fiscal year 2023. The SEFA was adjusted to reflect the correct amount of expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the actual vs. budgeted expenditure for the Unemployment Insurance grant.
Effect – DOES is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DOES did not adhere to internal control procedures to reasonably ensure that the SEFA be fairly presented.
Recommendation – We recommend that DOES adhere to internal control procedures to reasonably ensure that expenditures do not exceed budget or grant award amounts.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOES concurs with this finding. The introduction of the new financial system resulted in the creation of several clearing accounts, necessitating ongoing monitoring and adjustments. One such account is the PNG Clearing Account. The specific transaction in question arose from a general ledger adjustment made during the fiscal year 2023 year-end close to reconcile outstanding balances within the PNG clearing account. This adjustment occurred subsequent to the closure of the subledger, prompting corrections at the source and resulting in discrepancies between subledger and general ledger balances.
Management has taken prompt action to address this issue by rectifying discrepancies in the SEFA. Additionally, as part of a agency-wide remediation, we have implemented enhanced controls to facilitate timely reconciliation of subledgers with the general ledger, thus mitigating the risk of future discrepancies. It is important to highlight that this incident is an isolated occurrence within the context of the grant program, stemming from the transition to a new financial system, process changes, and the introduction of subledgers. Importantly, this discrepancy pertains solely to the initial SEFA amount based on general ledger reporting and does not impact federal reporting to the grantor, which is based on subledger data. Furthermore, it does not indicate overspending of federal resources.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-009
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Labor
Unemployment Insurance
ALN: 17.225
Award #: UI-37216-22-55-A-11
Award Year: 10/01/2021 – 12/31/2024 Department of Employment Services (DOES)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 200.510(b), Schedule of Expenditures of Federal awards, states that the auditee must also 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 2 CFR section 200.502, Basis for determining Federal Awards expended.
Condition – During our review of grant carryover analysis in relation to the fiscal year 2023 audit, we noted that DOES recorded $3.3 million of federal administrative expenditures in the current year SEFA in excess of the overall grant award amount for Unemployment Insurance program Award #UI-37216-22-55-A-11. BDO noted that the amount is related to the year-end closing entry reconciling DIFS R100 vs. R51 and should have been reversed in fiscal year 2023. The SEFA was adjusted to reflect the correct amount of expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the actual vs. budgeted expenditure for the Unemployment Insurance grant.
Effect – DOES is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DOES did not adhere to internal control procedures to reasonably ensure that the SEFA be fairly presented.
Recommendation – We recommend that DOES adhere to internal control procedures to reasonably ensure that expenditures do not exceed budget or grant award amounts.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOES concurs with this finding. The introduction of the new financial system resulted in the creation of several clearing accounts, necessitating ongoing monitoring and adjustments. One such account is the PNG Clearing Account. The specific transaction in question arose from a general ledger adjustment made during the fiscal year 2023 year-end close to reconcile outstanding balances within the PNG clearing account. This adjustment occurred subsequent to the closure of the subledger, prompting corrections at the source and resulting in discrepancies between subledger and general ledger balances.
Management has taken prompt action to address this issue by rectifying discrepancies in the SEFA. Additionally, as part of a agency-wide remediation, we have implemented enhanced controls to facilitate timely reconciliation of subledgers with the general ledger, thus mitigating the risk of future discrepancies. It is important to highlight that this incident is an isolated occurrence within the context of the grant program, stemming from the transition to a new financial system, process changes, and the introduction of subledgers. Importantly, this discrepancy pertains solely to the initial SEFA amount based on general ledger reporting and does not impact federal reporting to the grantor, which is based on subledger data. Furthermore, it does not indicate overspending of federal resources.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-009
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Labor
Unemployment Insurance
ALN: 17.225
Award #: UI-37216-22-55-A-11
Award Year: 10/01/2021 – 12/31/2024 Department of Employment Services (DOES)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 200.510(b), Schedule of Expenditures of Federal awards, states that the auditee must also 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 2 CFR section 200.502, Basis for determining Federal Awards expended.
Condition – During our review of grant carryover analysis in relation to the fiscal year 2023 audit, we noted that DOES recorded $3.3 million of federal administrative expenditures in the current year SEFA in excess of the overall grant award amount for Unemployment Insurance program Award #UI-37216-22-55-A-11. BDO noted that the amount is related to the year-end closing entry reconciling DIFS R100 vs. R51 and should have been reversed in fiscal year 2023. The SEFA was adjusted to reflect the correct amount of expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the actual vs. budgeted expenditure for the Unemployment Insurance grant.
Effect – DOES is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DOES did not adhere to internal control procedures to reasonably ensure that the SEFA be fairly presented.
Recommendation – We recommend that DOES adhere to internal control procedures to reasonably ensure that expenditures do not exceed budget or grant award amounts.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOES concurs with this finding. The introduction of the new financial system resulted in the creation of several clearing accounts, necessitating ongoing monitoring and adjustments. One such account is the PNG Clearing Account. The specific transaction in question arose from a general ledger adjustment made during the fiscal year 2023 year-end close to reconcile outstanding balances within the PNG clearing account. This adjustment occurred subsequent to the closure of the subledger, prompting corrections at the source and resulting in discrepancies between subledger and general ledger balances.
Management has taken prompt action to address this issue by rectifying discrepancies in the SEFA. Additionally, as part of a agency-wide remediation, we have implemented enhanced controls to facilitate timely reconciliation of subledgers with the general ledger, thus mitigating the risk of future discrepancies. It is important to highlight that this incident is an isolated occurrence within the context of the grant program, stemming from the transition to a new financial system, process changes, and the introduction of subledgers. Importantly, this discrepancy pertains solely to the initial SEFA amount based on general ledger reporting and does not impact federal reporting to the grantor, which is based on subledger data. Furthermore, it does not indicate overspending of federal resources.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-010
Prior Year Finding Number: 2022-004
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Emergency Rental Assistance (ERA) Program
ALN: 21.023
Award #: N/A
Award Year: 12/27/2020 – 09/30/2025 Department of Human Services (DHS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Treasury Department ERA FAQ 8-25-21, question 1, states that grantees must require all applications for assistance to include an attestation from the applicant that all information included is correct and complete.
The Treasury Department ERA FAQ 8-25-21, question 4, states that the statutes establishing ERA1 and ERA2 limit eligibility to households based on certain income criteria. For purposes of ERA1, the area median income for a household is the same as the income limits for families published by the Department of Housing and Urban Development (HUD) in accordance with 42 U.S.C. 1437a(b)(2), available under the heading for “Access Individual Income Limits Areas” at https://www.huduser.gov/portal/datasets/il.html. If a grantee in ERA1 uses a household’s monthly income to determine eligibility, the grantee should review the monthly income information provided at the time of application and extrapolate over a 12-month period to determine whether household income exceeds 80 percent of area median income. For example, if the applicant provides income information for two months, the grantee should multiply it by six to determine the annual amount. If a household qualifies based on monthly income, the grantee must redetermine the household income eligibility every three months for the duration of assistance.
Grantees in ERA1 and ERA2 must have a reasonable basis under the circumstances for determining income. A grantee may support its determination with both a written attestation from the applicant as to household income and also documentation available to the applicant, such as paystubs, W-2s or other wage statements, tax filings, bank statements demonstrating regular income, or an attestation from an employer. In appropriate cases, grantees may rely on an attestation from a caseworker or other professional with knowledge of a household’s circumstances to certify that an applicant’s household income qualifies for assistance.
Under categorical eligibility, if an applicant’s household income has been verified to be at or below 80 percent of the area median income (for ERA1) or if an applicant’s household has been verified as a low-income family as defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)) (for ERA2) in connection with another local, state, or federal government assistance program, grantees are permitted to rely on a determination letter from the government agency that verified the applicant’s household income or status as a low-income family, provided that the determination for such program was made on or after January 1, 2020.
The Treasury Department ERA FAQ 8-25-21, question 5, states grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount. If a household does not have a signed lease, documentation of residence may include evidence of paying utilities for the residential unit, an attestation by a landlord who can be identified as the verified owner or management agent of the unit, or other reasonable documentation as determined by the grantee. In the absence of a signed lease, evidence of the amount of a rental payment may include bank statements, check stubs, or other documentation that reasonably establishes a pattern of paying rent, a written attestation by a landlord who can be verified as the legitimate owner or management agent of the unit, or other reasonable documentation as defined by the grantee in its policies and procedures.
Condition – During testing over rental beneficiary eligibility for the Emergency Rental Assistance Program, we noted that the District Department of Human Services, Family Services Agency (FSA) (“the Agency”) was unable to provide sufficient documentation to support the beneficiaries’ determination for rent payments during the fiscal year 2023 audit. Specifically, out of a sample of 60 transactions tested, we noted the following exceptions:
• For four (4) participants, the amount the Agency paid for rental assistance did not agree to the various documentation provided. The total payment not fully supported totaled $7,165, representing known questioned costs.
• For thirteen (13) participants, the Agency did not follow their documented policies and procedures such that the rental calculation worksheets were not provided, or these were not signed by the participants or by the housing support provider.
• For nine (9) participants, there are no evidence of a formal approval of the participant eligibility by the Agency.
The DC Department of Human Services, Family Services Agency, lacks a quality control oversight system to ensure that eligibility documentation is maintained to support eligibility decisions.
Questioned Costs – $7,165
Context – This is a condition identified per review of the Agency’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – The Agency did not appear to adhere to internal control procedures to ensure that applications are properly completed and retained.
Recommendation – We recommend that the Agency strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The Department of Human Services (DHS) agrees that for four (4) participants, the amount the Agency paid for rental assistance did not agree to the various documentation provided. DHS has reviewed these participants’ files and concluded that although these represent gaps in program controls, all four households meet general ERA eligibility criteria. Three (3) participants enrolled in Temporary Assistance for Needy Families (TANF) and/or Supplemental Nutrition Assistance Program (SNAP) and one (1) participant provided income documentation to support that all were well within the 80% AMI and eligible for ERA assistance. In the cases where more subsidy was paid on behalf of households than was documented in the Family Rehousing and Stabilization Program (FRSP) rent calculation worksheet, ERA regulations permitted payment up to full rent and therefore the amounts paid out were eligible under ERA.
DHS agrees with the finding that thirteen (13) participants were missing rental subsidy calculation worksheets or were missing signatures on their rental calculation worksheet and that nine (9) participants were missing formal approval of participant eligibility. These participants were enrolled in the FRSP, also known as Rapid Re-housing (RRH). FRSP is a key program within the District’s continuum of care to support families who are experiencing homelessness or are at imminent risk of experiencing homelessness. The rental calculation worksheet is used to determine the amount an FRSP household contributes towards monthly rent based on household income and makeup. The remaining monthly rent is covered by a subsidy, paid out of ERA funds. In situations where participants were missing the formal approval form or signature, DHS has confirmed that they came from a homeless/imminent risk of homelessness situation through other records such as case notes within Homeless Management Information System (HMIS).
Gaps in documentation were due to rapidly expanding caseloads during the pandemic and new safety protocols that required certain changes to case management protocols. To improve controls, DHS introduced new Standard Operating Procedures (SOPs) for FRSP in fiscal year 2023. The new SOP implements stricter internal control procedures, conducting regular audits, and streamlining the eligibility determination process. The majority of findings were for participants enrolled into FRSP before the new SOPs took effect. DHS will continue execution of the stricter SOPs to ensure there are no documentation gaps moving forward.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-011
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Emergency Rental Assistance (ERA) Program
ALN: 21.023
Award #: N/A
Award Year: 12/27/2020 – 09/30/2025 Department of Human Services (DHS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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.
Condition – Certain grant expenditures amounting to approximately $42.4 million, had erroneously been reflected as expenditures under assistance listing number 21.023, COVID-19 – Emergency Rental Assistance Program. Subsequently, DHS adjusted the SEFA to reflect the actual amount of expenditures incurred for the program.
Questioned Costs – None.
Context – This is a condition identified per review of the DHS’ compliance with the specified requirements.
Effect – DHS is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DHS did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that DHS adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS OCFO concurs with the finding. Initially, the expenditures were inadvertently categorized to the incorrect program. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-012
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 - Homeowner Assistance Fund
ALN: 21.026
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Housing and
Community Development (DHCD)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The OMB Compliance Supplement states that Homeowner Assistance Fund participants must establish and adhere to reasonable policies and procedures for evaluating homeowners’ applications in accordance with the HAF Guidance maintained by the U.S. Department of the Treasury. In addition, Homeowner Assistance Fund participants are expected to have policies and procedures to determine homeowner eligibility based on the following criteria: 1) financial hardship, and 2) income determination.
Condition – During our review of DHCD’s internal control over compliance with eligibility requirements, we noted that the agency outsources the eligibility determination process to a third-party administrator to ensure that all applicants meet the necessary criteria. The internal controls at the agency level are limited to validating applications with exceptions and are not robust enough to verify the eligibility of all applications or to confirm the accuracy of the eligibility determinations made by the administrator.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCD’s internal control over compliance with respect to eligibility requirements.
Effect – DHCD did not comply with eligibility requirements of the Homeowner Assistance Fund program.
Cause – DHCD does not have fully effective internal controls over compliance with respect to eligibility requirements.
Recommendation – We recommend that DHCD implement policies and procedures to ensure that key controls exist at the agency to verify all applicants meet eligibility requirements.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-013
Prior Year Finding Number: N/A
Compliance Requirement: Subrecipient Monitoring
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 - Homeowner Assistance Fund
ALN: 21.026
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Housing and
Community Development (DHCD)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Additionally, 2 CFR 200.332 specifies that pass-through entities must 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.
Based upon the pass-through entity's assessment of risk posed by the subrecipient, auditee management determined that onsite reviews of the subrecipient’s program operations were appropriate and designed the following control: DHCD performs desk audits, scheduled site visits and unscheduled site visits during the fiscal year. Reports are prepared at the site visits and properly documented. The reports include deficiencies, recommendations, and proposed corrective action and are reviewed and approved by the Project Managers, Program Managers, and Supervisory Program Managers.
Condition – During our review of four (4) subrecipient samples, we noted the following:
• For two (2) subrecipients, DHCD conducted onsite reviews for the Community Development Block Grants program. However, these reviews did not specifically address the Homeowner Assistance Fund program as required by the guidance and controls outlined.
• For one (1) subrecipient, DHCD conducted a review, but was unable to provide evidence of a finalized report.
• For one (1) subrecipient, DHCD neither performed an onsite review nor a desk audit.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCD’s compliance with the subrecipient monitoring requirements using a statistically valid sample.
Effect – DHCD did not comply with the subrecipient monitoring requirements of the Homeowner Assistance Fund program.
Cause – DHCD does not have fully effective internal controls over compliance with respect to the onsite review process.
Recommendation – We recommend that DHCD strictly adhere to its policies and procedures to ensure that onsite reviews are properly performed and documented for subrecipients.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-014
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
ALN: 21.027
Award #: N/A
Award Year: 10/01/2021 – 09/20/2023 Department of Behavioral Health (DBH); Department of Energy and Environment (DOEE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Condition – During our tests of the design and implementation of internal controls, we noted the following issues:
DBH did not effectively implement controls over employee premium pay benefits.
• For two (2) out of 60 samples, we identified exceptions to the hours charged to the program. In one instance, there were 24 hours charged to the program on a single day for one employee. In addition, we also noted an instance of charging of hours within the “not worked” code and incorrect hours were charged to the project.
At DOEE, employees charge hours worked each pay period on a time sheet to specific cost centers or combo codes as referred by the agency.
• For one (1) out of 60 samples, we noted that the holiday hours have not been allocated between programs proportionally as required by the District’s policies, as such, incorrect hours were charged to the projects.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Coronavirus State and Local Fiscal Recovery Funds program in fiscal year 2023 were $40,106,238.
Effect – Without internal controls operating as designed, the CSLFRF program was unable to demonstrate that the payroll expenditures charged to the program accurately reflected the costs incurred for the program.
Cause – The CSLFRF program did not follow its own internal control policies, procedures and controls to ensure that payroll costs recorded are properly reviewed and approved.
Recommendation – We recommend that the CSLFRF program fully implement its plan to deploy policies and procedures to ensure that payroll costs are recorded accurately.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH and DOEE concur with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-015
Prior Year Finding Number: N/A
Compliance Requirement: Subrecipient Monitoring
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
ALN: 21.027
Award #: N/A
Award Year: 10/01/2021 – 09/20/2023 Department of Energy and Environment (DOEE); Office of Neighborhood Safety and Engagement (ONSE); Various Other District Agencies
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with the Uniform Guidance in 2 CFR Section 200.331(a) Requirements for Pass-Through Entities requires that pass-through entities must: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – The program’s documented subrecipient monitoring requirements includes risk assessments, monitoring of subrecipients and the submission and review of monthly financial and performance reports.
During our testing of the subrecipient’s compliance requirements, we noted the following issues:
• Our examination of the program’s subrecipient monitoring requirements includes submission and review of monthly financial and performance reports. We noted for one (1) out of 41 samples, the subrecipient failed to submit their monthly financial and performance reports.
• For one (1) out of 41 samples the agency had no evidence to support it had performed the mandatory follow up on reported audit findings in the subrecipient’s audit report for the Corrective Action taken by the subrecipient to remediate the finding.
In addition, grant expenditures totaling approximately $1.9 million were erroneously excluded as subrecipient expenditures on the Schedule of Federal Awards under assistance listing number 21.027, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The District subsequently adjusted the SEFA to reflect the correct amount of subrecipient expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the agencies’ compliance with specified monitoring requirements on the program’s subrecipients using a statistically valid sample.
Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved.
Also, the District is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance. In addition, the District did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that the agencies maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients, and to adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOEE, ONSE and various other District agencies agree with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-016
Prior Year Finding Number: 2022-007
Compliance Requirement: Equipment and Real Property Management
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 District of Columbia Public Schools (DCPS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Also, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)).
Condition – We noted that there is no formally documented physical count for equipment purchased using federal funds in 2023.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DCPS’ compliance with the specified requirements using a statistically valid sample.
Effect – There is a risk that a lack of physical count could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received.
Cause – Due to a lack of formal process and policy regarding physical count, DCPS was unable to adequately support compliance with its policies and procedures regarding monitoring of equipment acquired with Federal funds.
Recommendation – We recommend that DCPS implement policies, procedures and controls that will ensure that equipment counts are conducted, that evidence of a count is formally documented and an authorized individual formally approves the result of the count and the related reconciliation to equipment records, in order to adhere to Federal regulations related to equipment and its related maintenance.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DCPS agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-017
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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.
Condition – Certain grant expenditures amounting to approximately $9.7 million, had erroneously been reflected as expenditures under assistance listing number 84.425D, Elementary and Secondary School Emergency Relief (ESSER) Fund. Subsequently, OSSE adjusted the SEFA to reflect the expenditure to 84.425U, American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund. Further, the amount of subrecipient expenses initially reported is overstated by $269,140. Subsequently, OSSE adjusted the SEFA to reflect the actual amount of subrecipient expenditures incurred for the program.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with the specified requirements.
Effect – OSSE is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – OSSE did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that OSSE adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-016
Prior Year Finding Number: 2022-007
Compliance Requirement: Equipment and Real Property Management
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 District of Columbia Public Schools (DCPS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Also, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)).
Condition – We noted that there is no formally documented physical count for equipment purchased using federal funds in 2023.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DCPS’ compliance with the specified requirements using a statistically valid sample.
Effect – There is a risk that a lack of physical count could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received.
Cause – Due to a lack of formal process and policy regarding physical count, DCPS was unable to adequately support compliance with its policies and procedures regarding monitoring of equipment acquired with Federal funds.
Recommendation – We recommend that DCPS implement policies, procedures and controls that will ensure that equipment counts are conducted, that evidence of a count is formally documented and an authorized individual formally approves the result of the count and the related reconciliation to equipment records, in order to adhere to Federal regulations related to equipment and its related maintenance.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DCPS agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-017
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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.
Condition – Certain grant expenditures amounting to approximately $9.7 million, had erroneously been reflected as expenditures under assistance listing number 84.425D, Elementary and Secondary School Emergency Relief (ESSER) Fund. Subsequently, OSSE adjusted the SEFA to reflect the expenditure to 84.425U, American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund. Further, the amount of subrecipient expenses initially reported is overstated by $269,140. Subsequently, OSSE adjusted the SEFA to reflect the actual amount of subrecipient expenditures incurred for the program.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with the specified requirements.
Effect – OSSE is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – OSSE did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that OSSE adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-019
Prior Year Finding Number: 2022-010
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – During our testwork for Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll), we noted:
• For seventeen (17) out of a sample of 40 employees tested, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation that the annual leave or overtime hours worked by the employee during the selected payperiods were preapproved.
• For one (1) out of a sample of 40 employees tested, DHS/ESA was unable to provide an explanation of the identified variance between the salary earned and the amount included on the paystub.
• For one (1) out of a sample of 40 employees tested, DHS/ESA was unable to provide an explanation and support for the benefit refund taxable included on the paystub and the variance between the hours on the timesheet and on the pay stub.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the TANF program in fiscal year 2023 were $15,577,889.
Effect – DHS/ESA was unable to demonstrate that annual leave or overtime hours charged to the federal program was approved in advance in accordance with the internal policies and procedures of the agency. In addition, without adequate internal controls in place to ensure that documentation that supports the costs are properly maintained, costs could be charged that are not properly approved.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that authorization forms evidencing the preapproval of annual leave or overtime hours are obtained and maintained as well as support of salary and benefits earned.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of annual leave or overtime hours is obtained and maintained. In addition, we recommend that the agency strengthen their policies and procedures to ensure that transactions are properly supported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-020
Prior Year Finding Number: 2022-011
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
For TANF, per 45 CFR Section 205.60 (a), “The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under Section 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance.”
Condition – During our testing over beneficiary eligibility compliance requirements of the Temporary Assistance for Needy Families (TANF) program, we selected a sample of 60 beneficiaries in fiscal year 2023 to test DHS’ compliance with TANF eligibility requirements. We noted the following:
• For five (5) out of 60, DHS was unable to provide support that would allow us to test that cash assistance was not provided to an individual during the 10-year period that began on the date the individual was convicted in Federal or State court of having made a fraudulent statement or representation with respect to place of residence. In addition, for these five (5) samples, DHS was unable to provide support that would allow us to test that assistance was not provided to any individual who was fleeing to avoid prosecution, or custody or confinement after conviction, for a felony or attempt to commit a felony, or who is violating a condition of probation or parole imposed under Federal or State law.
The questioned costs for the above issues amounted to $22,279, which represents 7.75% of the total eligibility amounts tested related to the 60 sampled items of $287,436.
Questioned Costs – Known amount is $22,279.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without properly maintaining documentation to support eligibility determinations, ineligible beneficiaries may receive benefits under the TANF grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements.
Cause – DHS did not consistently adhere to its established policies and procedures requiring it to maintain documentation supporting participant eligibility.
Recommendation - We recommend that DHS strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS/ESA concur with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-021
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
According to Title IV-A, Section 411 of the Social Security Act (the Act), 45 CFR 265.3, and the American Recovery and Reinvestment Act (ARRA) of 2009, (Public Law 111-5), each State must file an annual report containing information on the TANF program and the State’s maintenance-of-effort (MOE) program(s) for that year, including strategies to implement the Family Violence Option, State diversion programs, and other program characteristics. States are required to submit the ACF-196R report quarterly, beginning in Federal Fiscal Year (FFY) 2015, in lieu of the SF-425, Federal Financial Report (financial status). Each State files quarterly expenditure data on the State’s use of Federal TANF funds, State TANF MOE expenditures, and State expenditures of MOE funds in separate State programs. If a State is expending Federal TANF funds received in prior fiscal years, it must file a separate quarterly TANF Financial Report for each fiscal year that provides information on the expenditures of that year’s TANF funds. This form must be used for reporting regular TANF grant funds, Contingency Funds, and ARRA-Emergency Fund for TANF State Programs funds. See TANF-ACF-PI-2014-02, available at http://www.acf.hhs.gov/programs/ofa/resource/tanf-acf-pi-2014-02, for more information.
For the ACF-204 report (Special Reporting), according to 45 CFR 265.9, 45 CFR 265.10, 45 CFR 263, Subpart A, and TANF-ACF-PI-01-06 dated October 24, 2001, Each State must file an annual report containing information on the TANF program and the State’s maintenance-of-effort (MOE) program(s) for that year, including strategies to implement the Family Violence Option, State diversion programs, and other program characteristics. Each State must complete the Annual Report including the Annual Report on State Maintenance-of-Effort Programs (ACF-204) for each program for which the State has claimed basic MOE expenditures for the fiscal year. States may submit this report as a freestanding report or as an addendum to the fourth quarter TANF Data Report. The total MOE expenditures reported in item 5 of the ACF-204 should equal the total MOE expenditures reported in line 24, columns (B) plus (C) of the 4th quarter ACF-196R TANF Financial Report; or line 17, column (B) of the ACF-196-TR, Territorial Financial Report.
For the ACF-196P (Special Reporting), on March 11, 2021, the President signed the American Rescue Plan Act of 2021, now known as Public Law 117-2, into law establishing the Pandemic Emergency Assistance Fund (PEAF) in section 403(c) of the Social Security Act. 42 U.S.C. § 603(c). PEAF provided $1 billion in funding to states, tribes, and five U.S. territories to assist families impacted by the Coronavirus Disease 2019 by providing non-recurrent, short-term benefits. PEAF provided states and tribes until September 30, 2022, to spend an initial allotment of funds. 42 U.S.C. § 603(c)(6)(D)(i). Any unused funds were to be reallotted among the states or tribes that had used all their funds. 42 U.S.C. § 603(c)(4)(B). Effective FFY 2021, all grantees administering the TANF PEAF grant must complete reporting in accordance with these ACF-196P instructions. As well, state, territory and tribal lead agencies must complete and submit this report (or 477 narrative report) in accordance with the terms and conditions of the TANF PEAF grant authorized by the American Rescue Plan Act of 2021. Expenditures (for lines 2 through 4) on the ACF-196P mean the payments made with Pandemic Emergency Assistance Fund dollars. A grantee must not include obligations not yet paid (i.e., unliquidated funds) on these line items.
Condition – We noted the following:
• During our test work over the quarterly ACF-196R report, we noted that for Grant Identifying number - G-2301DCTANF the 4th quarter report was not adequately reviewed. Specifically, we noted that the report reflected that DHS had Maintenance of Effort (MOE) expenditures of $304,608,961. However, based on the supporting documentation provided, the expenditures should have been $304,558,961 thus overstating the report by $50,000. In addition, we noted that there was a variance of ($9,589,251) between the amount included in the SEFA detail including Indirect Costs ($67,483,475) and the cumulative amount reported on the ACF-196R for the fiscal year 2023 grant for the sum of federal and contingency funds ($77,072,726). DHS was unable to provide support for the variance.
• During our test work over the Matching, Level of Effort, Earmarking compliance requirement, we noted that although the Cumulative Administrative Costs reported on ACF-196R for the G-2301DCTANF ($9,736,237) did not exceed the Maximum Allowed for the G-2301DCTANF grant (15% of $88,381,274 which equals $13,257,191), the amount reported as Cumulative Administrative Costs on ACF-196R for the period October 1, 2022 to September 30, 2023 did not agree with the amounts included in the supporting documentation ($16,805,114).
• During our test work over the annual ACF-204 report, we noted the report was not adequately reviewed. Specifically, we noted that the report reflected that DHS had MOE expenditures of $287,422,679. However, based on the supporting documentation provided, the expenditures should have been $304,558,961 thus understating the report by $17,136,282.
• During our test work over the annual ACF-196P report, we noted the report was not adequately reviewed. Specifically, we noted that the report reflected that DHS had PEAF expenditures of $1,446,322. However, based on the supporting documentation provided, the expenditures should have been $1,360,500, thus overstating the report by $85,822.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without proper internal controls and policies and procedures in place to ensure that correct amounts were reported and were properly reviewed, the TANF program:
• Incorrectly reported MOE expenditures on the ACF-204 report which resulted in an understatement of $17,136,282,
• Incorrectly reported MOE expenditures on the ACF-196R report which resulted in an overstatement of $50,000, and
• Incorrectly reported PEAF expenditures on the ACF-196P report which resulted in an overstatement of $85,822.
Cause – Management did not have proper internal controls and policies and procedures in place to ensure that the amounts on the ACF-196R, ACF-204 and the ACF-196P were properly reported and the reports were properly reviewed and approved.
Recommendation - We recommend that DHS implement policies, procedures and controls that will enable an accurate reconciliation between the data sources used in the preparation of the ACF-196R, ACF-196P and ACF-204 reports to ensure proper reporting of the MOE amounts and PEAF expenditures. In addition, DHS management should establish controls over the preparation of the ACF-204 to ensure that the report is reviewed by DHS personnel prior to the report being certified and submitted by program personnel.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-022
Prior Year Finding Number: 2022-012
Compliance Requirement: Reporting;
Special Tests and Provisions – Penalty for Failure to Comply With Work Verification Plan
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 45 CFR Section 261.60 (a), “A State must report the actual hours that an individual participates in an activity, subject to the qualifications in paragraphs (b) and (c) of this section and Section 261.61(c). It is not sufficient to report the hours an individual is scheduled to participate in an activity. (b) For the purposes of calculating the work participation rates for a month, actual hours may include the hours for which an individual was paid, including paid holidays and sick leave. For participation in unpaid work activities, it may include excused absences for hours missed due to a maximum of 10 holidays in the preceding 12-month period and up to 80 hours of additional excused absences in the preceding 12-month period, no more than 16 of which may occur in a month, for each work-eligible individual. Each State must designate the days that it wishes to count as holidays for those in unpaid activities in its Work Verification Plan. It may designate no more than 10 such days. In order to count an excused absence as actual hours of participation, the individual must have been scheduled to participate in a countable work activity for the period of the absence that the State reports as participation. A State must describe its excused absence policies and definitions as part of its Work Verification Plan, specified at Section 261.62. (c) For unsubsidized employment, subsidized employment, and OJT, a State may report projected actual hours of employment participation for up to six months based on current, documented actual hours of work. Any time a State receives information that the client's actual hours of work have changed, or no later than the end of any six-month period, the State must re-verify the client's current actual average hours of work, and may report these projected actual hours of participation for another six-month period. (d) A State may not count more hours toward the participation rate for a self-employed individual than the number derived by dividing the individual's self-employment income (gross income less business expenses) by the Federal minimum wage. A State may propose an alternative method of determining self-employment hours as part of its Work Verification Plan. (e) A State may count supervised homework time and up to one hour of unsupervised homework time for each hour of class time. Total homework time counted for participation cannot exceed the hours required or advised by a particular educational program.”
Per 45 CFR Section 261.61 (a), “A State must support each individual’s hours of participation with documentation in the case file. In accordance with Section 261.62, a State must describe in its Work Verification Plan the documentation it uses to verify hours of participation in each activity.”
According to the DC State Verification Plan, the D.C. Department of Human Services (DHS), Department of Human Services Monitoring Unit reviews and audits all documentation submitted by vendors reflecting the activities of recipients in TANF Employment program. This documentation includes time sheets, activity logs, school records, pay stubs, and verification of employment, work experience and on-the-job training. The Monitoring Unit completes this audit process to determine if sufficient documentation exists to substantiate reported time and attendance data, to warrant a payment to TANF Employment program vendors, and submission of countable hours for federal reporting purposes. The District projects hours of participation in unsubsidized, self-employment for six months or until the recipient's next scheduled recertification, whichever is sooner.
Per 45 CFR Section 265.7 (a)-(c), “Each State’s quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), and the SSP-MOE Data Report) must be complete and accurate and filed by the due date.”
For disaggregated data report, ‘a complete and accurate report’ means that:
(1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems, and include correction of the quarterly data by the end of the fiscal year reporting period;
(2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3) The State reports data for all required elements (i.e., no data are missing);
(4)(i) The State provides data on all families; or (ii) if the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and
(5) Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates.
For an aggregated data report, “a complete and accurate report” means that:
(1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems;
(2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3) The State reports data on all applicable elements; and
(4) Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts).”
45 CFR Section 265.7 (f) states that “States must maintain records to adequately support any report, in accordance with Section 75.361 through 75.370 of this title.”
Condition – During our test work over a sample of 60 participants for Special Tests and Provisions - Penalty for Failure to Comply with Work Verification Plan and Reporting, we noted:
• For nine (9) instances, we noted that although the hours reported on the ACF-199 report met or exceeded the required hours, the hours reported did not agree with the projected hours per the support provided.
• For nine (9) instances, we noted that although the hours reported on the ACF-199 report met or exceeded the required hours, DHS/ESA was unable to provide support for the hours reported on the ACF-199 report.
• For two (2) instances, we noted that although the hours on the support provided met or exceeded the required hours, the hours reported in the ACF-199 report do not agree with the average hours in CATCH or the support provided.
• For two (2) instances, we noted that the support provided was for more than six months before the sample month. Therefore, the hours were not properly supported.
• For one (1) instance, although the hours on the support provided met or exceeded the required hours, the hours reported in the ACF-199 report do not agree with the average hours in CATCH. Therefore, the support does not agree with the hours reported. In addition, we noted that although the Work Number documentation indicated that the customer was fully engaged (at least 30 hours per payperiod) for at least three months during fiscal year 2023 and the customer was required to work 20 hours per week, DHS/ESA did not lift the Work Requirement Noncompliance sanction that has been imposed since 5/1/2016.
• For one (1) instance, although the hours on the support provided met or exceeded the required hours, and the hours reported in the ACF-199 report agree with the average hours reported in CATCH, the hours entered in CATCH should initially have been denied by OPM and then re-entered by provider because the hours were entered incorrectly.
The information tested in our sample represents the underlying data used in Reporting for the 1st and 4th quarters of fiscal year 2023. Consequently, DHS incorrectly reported data in the ACF-199 report for the 1st and 4th quarters of fiscal year 2023.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Data within the ACF-199 report may not be complete and accurate. Specifically, if the work participation data is not substantiated, or inconsistencies are noted, it may result in inaccurate data being reported and may lead to an incorrect ACF-199 report and could result in an incorrect allocation of Federal Funds to the state.
Cause – Controls are not operating effectively over the documentation of work participation data to ensure that adequate evidence of the work participation is maintained.
Recommendation - We recommend that DHS enforce existing policies and procedures and implement additional controls to ensure that adequate documentation is maintained to substantiate the work participation data reported in the ACF-199 report in accordance with the District of Columbia Work Verification Plan.
We also recommend that DHS implement policies, procedures and controls that will enable an accurate reconciliation between the data sources used in the preparation of the ACF-199 report to ensure proper reporting of data elements.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the findings. ESA agrees with the documentation issue, which is compounded by the lack of interface between the reporting data systems. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-023
Prior Year Finding Number: 2022-013
Compliance Requirement: Special Tests and Provisions – Income Eligibility and Verification System
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/
Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 45 CFR Section 205.56(a)(1)(i), “The State agency shall review and compare the information obtained from each data exchange against information contained in the case record to determine whether it affects the applicant’s or the recipient’s eligibility or the amount of assistance.”
Per 45 CFR Section 205.60 (a), “The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under Section 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance.”
For the Pandemic Emergency Assistance Fund (PEAF), per TANF-ACF-IM-2022-01 (Guidance for Use of the Pandemic Emergency Assistance Fund Appropriated in the American Rescue Plan (ARP) Act of 2021 (Pub. L. 117-2); Accompaniment to ACF-IOAS-DCL-22-01) “We remind grantees that the Income Eligibility Verification System (IEVS) does apply to the PEAF, as it is funded under Title IV-A; however, tribes are not subject to the IEVS requirements.”
Condition – During our test work of 60 cases selected to test the Special Tests and Provisions – Income Eligibility and Verification System (IEVS) for TANF, we noted that DHS was unable to provide sufficient documentation to support all eligibility determinations tested during the fiscal year 2023 audit. Specifically, out of the 60 beneficiary disbursements tested, we noted the following exceptions:
• For one (1) out of 60, although Outbound and Inbound activity was provided showing that the agency used IEVS, the Outbound and Inbound activity occurred months after the payment selected. Therefore DHS/ESA was unable to provide evidence of use of IEVS to determine eligibility.
• For one (1) out of 60, although Outbound and Inbound activity was provided, the Inbound activity occurred years before the payment selected. Therefore DHS/ESA was unable to provide evidence of use of IEVS to determine eligibility.
In addition, during our test work of 60 cases selected to test the Special Tests and Provisions – Income Eligibility and Verification System (IEVS) for PEAF, we noted that DHS was unable to provide sufficient documentation to support all eligibility determinations tested during the fiscal year 2023 audit. The sample size consisted of 55 of the TANF Eligibility sample customers that received PEAF and 5 additional sample customers that received PEAF. We noted the following for the additional 5 samples tested for PEAF:
• For three (3) out of 5, DHS/ESA was unable to provide evidence of use of IEVS to determine eligibility.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – The District is not in full compliance with its policies and with Federal program compliance requirements surrounding records maintenance. Further, ineligible TANF beneficiaries may receive benefits under the TANF grant and the District may make payments on behalf of those beneficiaries.
Cause – Controls are not adequate to ensure that the District adheres to its established policies and procedures requiring it to maintain documentation supporting participant eligibility.
Recommendation - We recommend that DHS enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring case record documentation to ensure that Income Eligibility and Verification System requirements are complied with.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the finding in this report. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-024
Prior Year Finding Number: N/A
Compliance Requirement: Special Tests and Provisions – Lack of Child Care for Single Custodial Parent of Child Under Age Six
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/
Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 45 CFR Section 261.15 “Can a family be penalized if a parent refuses to work because he or she cannot find child care? (a) No, the State may not reduce or terminate assistance based on an individual’s refusal to engage in required work if the individual is a single custodial parent caring for a child under age six who has a demonstrated inability to obtain needed child care, as specified at §261.56.”
Per 45 CFR Section 261.16 “Does the imposition of a penalty affect an individual’s work requirement?
A penalty imposed by a State against the family of an individual by reason of the failure of the individual to comply with a requirement under TANF shall not be construed to be a reduction in any wage paid to the individual.”
Per 45 CFR Section 261.56 “What happens if a parent cannot obtain needed child care? (a)(1) If the individual is a single custodial parent caring for a child under age six, the State may not reduce or terminate assistance based on the parent's refusal to engage in required work if he or she demonstrates an inability to obtain needed child care for one or more of the following reasons: (i) Appropriate child care within a reasonable distance from the home or work site is unavailable; (ii) Informal child care by a relative or under other arrangements is unavailable or unsuitable; or (iii) Appropriate and affordable formal child care arrangements are unavailable. (2) Refusal to work when an acceptable form of child care is available is not protected from sanctioning.
Per 45 CFR Section 261.57 What happens if a State sanctions a single parent of a child under six who cannot get needed child care? (a) If we determine that a State has not complied with the requirements of §261.56, we will reduce the SFAG payable to the State by no more than five percent for the immediately succeeding fiscal year unless the State demonstrates to our satisfaction that it had reasonable cause or it achieves compliance under a corrective compliance plan pursuant to §§262.5 and 262.6 of this chapter. (b) We will impose the maximum penalty if: (1) The State does not have a statewide process in place to inform parents about the exception to the work requirement and enable them to demonstrate that they have been unable to obtain child care; or (2) There is a pattern of substantiated complaints from parents or organizations verifying that a State has reduced or terminated assistance in violation of this requirement. (c) We may impose a reduced penalty if the State demonstrates that the violations were isolated or that they affected a minimal number of families.
Condition – During our test work over a sample of twenty (20) out of a population of 194 childcare cases reviewed by supervisors and included on two quarterly reports submitted to the DC Office of the State Superintendent of Education (OSSE), for Special Tests and Provisions - Lack of Child Care for Single Custodial Parent of Child Under Age Six, we noted for one child care case reviewed, the Supervisory Case Record Review form was not signed or dated by the supervisor.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without following the internal controls and policies and procedures already in place to ensure that eligibility for child care is being properly determined by staff, it may result in inaccurate decisions for child care cases or inaccurate information being reported to OSSE.
Cause – Controls are not operating effectively over the documentation of the supervisory review of child care cases before submission of the quarterly report to OSSE.
Recommendation - We recommend that DHS/ESA enforce existing policies and procedures and implement additional controls to ensure that all Supervisory Case Record Review forms are properly signed and dated by the supervisor before the report is submitted to OSSE.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the finding noting that appropriate actions were taken to approve the case, however, the reviewing supervisor failed to sign the document after conducting the supervisory audit. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-025
Prior Year Finding Number: 2022-014
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Low Income Home Energy Assistance Program
ALN: 93.568
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Energy and Environment (DOEE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The OMB Compliance Supplement states that “Grant recipients may provide assistance to (a) households in which one or more individuals are receiving Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) benefits, or certain needs-tested veterans’ benefits; or (b) households with incomes which do not exceed the greater of 150 percent of the state’s established poverty level, or 60 percent of the state median income. Grantees may establish lower income eligibility criteria, but no household may be excluded solely on the basis of income if the household income is less than 110 percent of the state’s poverty level (42 USC 8624(b)(2)). Grantees must give priority to those households with the highest home energy costs or needs in relation to income and household size (42 USC 8624(b)(5)).”
Per 42 U.S. Code Section 8624(b)(2):
“The chief executive officer of each State shall certify that the State agrees to make payments under this subchapter only with respect to:
(A) Households in which 1 or more individuals are receiving:
(i) Assistance under the State program foundered under part A of the title IV of the Social Security Act;
(ii) supplemental security income payments under title XVI of the Social Security Act;
(iii) supplemental nutrition assistance program benefits under the Food and Nutrition Act of 2008; or
(iv) payments under section 1315, 1521, 1541, or 1542 of title 38, or under section 306 of the Veterans’ and Survivors’ Pension Improvement Act of 1978; or
(B) Households with incomes which do not exceed the greater of:
(i) An amount equal to 150 percent of the poverty level for such State; or
(ii) An amount equal to 60 percent of the State median income.”
Condition – During our review of 60 eligibility samples, we noted the following exceptions:
• DOEE is not performing review of all individual's application. DOEE's policy is to perform secondary reviews of a minimum of 25% of all applications each fiscal year, however, there is no documentation how these policies and procedures were implemented and how they are covering 25% minimum of the population.
• The total population initially provided did not reconcile to SEFA.
• For 1 sample selected, DOEE was not able to provide sufficient supports to verify that the address mentioned on the beneficiary letter and the gas bill belongs to the same person.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DOEE’s compliance with specified requirements for eligibility using a statistically valid sample.
Effect – Without proper review, inaccurate benefit amount or ineligible participant may receive benefits even if not eligible. Also, the total eligibility population may not be complete.
Cause – It appears that DOEE’s internal controls were not operating effectively over the eligibility household income population.
Recommendation – We recommend that DOEE strengthen their existing policies and procedures to ensure the review of the initial application household information including household incomes, household sizes, etc. are correctly recorded into the system based on supporting documentation. In addition, proper supporting documentation should be put in place to document the department’s control over review of applicant’s benefit application. Further, DOEE should review the eligibility population and reconcile to SEFA.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOEE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-026
Prior Year Finding Number: 2022-015
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Low Income Home Energy Assistance Program
ALN: 93.568
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Energy and Environment (DOEE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Compliance Supplement on earmarking requirement,
a) Planning and Administrative Costs, (1) No more than 10 percent of a state’s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)).
b) Weatherization – No more than 15 percent of the greater of the funds allotted or the funds available to the grant recipient for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grant recipient may then obligate and spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)).
c) Energy Need Reduction Services – No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)).
Condition – During our review of two (2) samples, although DOEE met the earmarking requirement, there was no evidence of review was performed.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DOEE’s compliance with specified requirements for earmarking calculations.
Effect – Without proper internal controls and policies and procedures in place to monitor and review, DOEE was not in compliance with the earmarking requirements.
Cause – DOEE does not have adequate controls in place to ensure that earmarking requirements are being properly calculated and reviewed and the required documentation is not being maintained to evidence compliance with the requirements.
Recommendation – We recommend that DOEE strengthen their existing policies and procedures to ensure the review of the earmarking calculations are performed. Further, proper supporting documentation should be put in place to document the department’s control over review of such calculations.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOEE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-027
Prior Year Finding Number: 2022-016
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Foster Care – Title IV-E
ALN: 93.658
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Based on CFSA’s Human Resources Administration Issuance: HR-06-1 dated May 12, 2006, staff must seek and receive advance written approval prior to working overtime. It also indicates that in emergency situations requiring an immediate response, the employee shall make every reasonable attempt to obtain advance approval by an appropriate manager or supervisor.
CFSA uses a Random Moment Study (RMS) to allocate the administrative costs to the Foster Care program. The study entails selecting a sample of social workers on a quarterly basis to participate in the RMS study where the social workers are required to notate what they were doing at the sample moment. Subsequently, the supervisors of these social workers review and validate their responses. validation of the responses adds an extra layer of reliability to the data collected. It ensures that the information provided by social workers is accurate and reflective of their actual activities. This validation process helps maintain the integrity of the study and ensures that the results are trustworthy in making decisions when determining the RMS percentage utilization in the allocation of the administrative costs.
Condition – During our review of the payroll process regarding the review and approval of time and attendance, we noted the following in our sample of 60 items:
• For three (3) out of the sample, CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime are maintained.
• For five (5) out of the sample, validation of the Random Moment Study was not performed.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample.
Effect – Without proper internal controls and policies and procedures in place to ensure maintenance of records increase the risk of disagreements between employer and employee regarding the employee’s correct payment. Additionally, the failure to validate the RMS could lead to inaccurate results, impacting the study’s effectiveness in allocating administrative costs.
Cause – CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime are maintained. Additionally, CFSA did not follow its internal controls, policies and procedures to ensure the accuracy and consistent documentation of the RMS validation.
Recommendation - We recommend that CFSA strengthen its policies, procedures, and controls to ensure that pre-authorization of overtime is maintained. Furthermore, we recommend that CFSA enhance its procedures to ensure the verification process is performed and maintained and the supervisors maintain consistent documentation of the RMS validation.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the finding. The issues related to pre-approval of overtime for the three employees in question pertained to pay periods that pre-dated CFSA’s corrective action on this same issue that resulted from the fiscal year 2022 Single Audit. Corrective action on this issue, therefore, has already been taken. With respect to the RMS, the Agency notes that while supervisory social worker validation response rates must improve, CFSA’s contracted cost allocation partner performs a 100% quality assurance review of each and every response to verify internal consistency and accuracy.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-028
Prior Year Finding Number: 2022-017
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Foster Care – Title IV-E
ALN: 93.658
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
45 CFR Section 92.20(b)(2), “Accounting records, "Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.”
45 CFR Section 1356.30(a) states, “The Title IV-E agency must provide documentation that criminal records checks have been conducted with respect to prospective foster and adoptive parents.”
42 U.S. Code Section 671(a)(20)(A), “In order for a State to be eligible for payments under this part, it shall have a plan approved by the Secretary which provides procedures for criminal records checks of national crime information databases for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child regardless of whether foster care maintenance payments or adoption assistance payments are to be made on behalf of the child under the State plan.”
Furthermore, per 45 CFR Section 1356.21(a), “Statutory and regulatory requirements of the Federal foster care program, To implement the foster care maintenance payments program provisions of the title IV-E plan and to be eligible to receive Federal financial participation (FFP) for foster care maintenance payments under this part, a Title IV-E agency must meet the requirements of this section, 45 CFR 1356.22, 45 CFR 1356.30, and Parts 472, 475(1), 475(4), 475(5), 475(6).”
Condition – During our audit we noted that in fiscal year 2023, the Foster Care program had total disbursements of $2,825,300 for 3,438 maintenance payments. We selected a sample of 60 participants representing disbursed federal funds totaling $48,217, we noted the following deficiencies:
• For two (2) of 60 samples, CFSA was unable to provide valid providers licenses for verification.
• For twenty-three (23) of 60 samples, CFSA did not provide complete evidence of the household composition; therefore, we were unable to determine whether background checks such as criminal record checks and fingerprint-based checks from the national crime information databases was performed for each member residing the home.
These deficiencies represent 43% of the total disbursements tested.
Questioned Costs – Known amount is $20,856.
Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample.
Effect – CFSA was not in compliance with the eligibility requirements of the Foster Care program.
Cause – CFSA does not have adequate controls in place to ensure that the required eligibility documentation is maintained to evidence compliance with eligibility requirements.
Recommendation - We recommend CFSA reevaluate and strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements in accordance with the program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the findings pertaining to the two licensing issues. In both instances, the foster care providers in question had indeed met all applicable licensing requirements and were licensed in the FACES.net interim Comprehensive Child Welfare Information System (CCWIS), but the certificates themselves were not issued.
Regarding the issue related to household composition, CFSA concurs with the finding. The finding is in reference to other adults residing in the foster home and not the licensed foster parents themselves. The District’s local licensing regulations require that CFSA conduct criminal background checks of other adults in the home during initial licensure of foster parents and then during each re-licensure cycle. CFSA provided background check documentation for other adults in homes in which they were applicable, but the household composition checklists, which delineate “other adults” residing in the home, were in some cases incomplete or unsigned by the licensing worker.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-029
Prior Year Finding Number: N/A
Compliance Requirement: Special Tests and Provisions – Payment Rate Setting and Application
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Foster Care – Title IV-E
ALN: 93.658
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per CFSA’s policies and procedures, providers must submit quarterly reports within 45 days of the end of each Federal fiscal year quarter. Upon receipt of quarterly reports from the provider, the Business Services Administration Program Manager reviews each Expenditure Detail Spreadsheet for compliance, accuracy and reasonableness.
Condition – Our assessment of the special tests and provisions requirement, revealed that while the selected providers’ quarterly reports displayed no deficiencies, CFSA was unable to provide documentation evidencing the review and approval of the quarterly reports for all 40 transactions that were tested.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample.
Effect – The absence of documentation specifying who reviews and approves the quarterly reports compromises accountability and creates ambiguity in identifying the responsible parties in instances of errors or discrepancies.
Cause – CFSA does not have adequate controls in place to ensure that review and approval of provider’s quarterly reports are documented.
Recommendation - We recommend CFSA strengthen its policies and procedures to address the review and approval process for the provider’s quarterly reports.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with this finding. The Agency also notes that quarterly cost reports are submitted to a central repository email inbox that is staffed by the five members of the BSA invoicing/cost reporting team. Each member maintains a provider-specific portfolio and is responsible for review and approval of provider cost reports within that portfolio. Moreover, the providers prepare these cost reports in close collaboration with CFSA’s Business Services Administration such that issues and questions are generally already addressed prior to submission. There is correspondence when corrections or inconsistencies need to be addressed, but there has been no formal correspondence when the reports are acceptable as submitted.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-030
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Children’s Health Insurance Program
ALN: 93.767
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the CHIP benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 40 participant files tested, we noted the following exception:
• For one (1) participant file, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-033
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.403, “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.”
Condition – During our testwork for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted the following in our sample of sixty-four (64) items:
• For one (1) out of the 64 samples, DBH did not provide adequate supporting documentation for year-end accrual for subrecipient expenditures amounting to $238,548.
Questioned Costs – Known amount is $238,548.
Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $7,294,191.
Effect – Lack of supporting documentation could result in disallowances of costs and DBH may have drawn down federal monies in excess of the expenditures incurred.
Cause – DBH did not have adequate controls in place to ensure that expenditures accrued were actually incurred by the subrecipient.
Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-034
Prior Year Finding Number: N/A
Compliance Requirement: Cash Management
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The OMB Compliance Supplement states that when entities are funded on a reimbursement basis, program costs must be incurred prior to the date of the reimbursement request.
Condition – During our testing of individual draws of federal funds, we noted that for one (1) of three (3) samples tested, the amount drawn exceeded the expenditures incurred. Cash draws appear to have exceed expenditures and DBH remitted $0 interest and/or refunds were remitted to the Federal government by DBH. In addition, we noted management did not provide a complete reconciliation between the cash drawdown schedule to the Schedule of Expenditures of Federal Awards (SEFA).
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. The sample drawdown was $9,262,365 and only supported by expenditures of $9,161,518, thus overdrawing by $100,847. Total drawdowns selected for testing amounted to $24,170,641.
Effect – DBH is not in compliance with cash management requirements. Requests for federal funds for the program were not based on the amount of actual disbursements and requests did not support the actual expenditures. This could subject DBH to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the agency to paying interest charges on these draws.
Cause – DBH did not have adequate controls in place to ensure that expenditures accrued were actually incurred by the subrecipient.
Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-035
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Federal Awardee Performance and Integrity Information System (FAPIIS) Reporting Compliance: In accordance with the regulatory requirements provided at 45 CFR 75.113 and Appendix XII to 45 CFR Part 75, recipients that have currently active Federal grants, cooperative agreements, and procurement contracts with cumulative total value greater than $10,000,000 must report and maintain information in the System for Award Management (SAM) about civil, criminal, and administrative proceedings in connection with the award or performance of a Federal award that reached final disposition within the most recent five-year period or affirm that there is no new information to report. The recipient must also make semiannual disclosures regarding such proceedings. Proceedings information will be made publicly available in the designated integrity and performance system (currently the FAPIIS).
Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: The FFATA (Pub. L. No. 109-282, as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management’s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management’s objectives are achieved.
Federal Financial Report (FFR) Controls over Reporting Compliance: In addition, 2 CFR 200.333 requires that financial records, supporting documents, statistical records, and all other non-federal entity records pertinent to a federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the federal awarding agency or pass-through entity in the case of a subrecipient.
Performance Progress Report (PPR) Underlying Data: The audit objective for the Reporting compliance requirement stated in the 2 CFR Part 200, appendix XI Compliance Supplement is as follows: Determine whether required reports for Federal awards include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements.
Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also 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 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use.
Condition – During our testing of the reporting compliance requirement, we noted the following:
• FAPIIS Reporting Compliance: During our testing of FAPIIS reporting for fiscal year ended September 30, 2023, it was noted that the program’s reporting regarding civil, criminal, and administrative proceedings in connection with the award or performance of a Federal award that reached final disposition within the most recent five-year period or affirmation that there was no new information to report was not submitted by the DBH program management.
• FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were not submitted by the DBH program management. DBH program management was not aware of FFATA reporting requirement and did not report subawards within the FSRS website during the award year. None of the ten subawards selected for testing were reported to FSRS. Total subawards tested were $3,559,912, and $0 was reported as required by FFATA requirements.
• FFR Controls over Reporting Compliance: DBH’s control over compliance for financial reporting is as follows: “All reports are reviewed by the Accounting Officer or Agency Fiscal Officer prior to submission to the Federal government. DBH Program and Fiscal Services staff review programmatic and financial reports.” We noted DBH did not have documentation of the control over compliance, as well as the review and approval of the Financial Reporting Report (FFR or SF-425).
• PPR Reporting Compliance: We found DBH did not have documentation for the information, and the source of the information, it used in its Opioid program’s Performance Progress Report. Information as reported on the reports is unsupported as management did not retain the underlying data.
• SEFA Reporting Compliance: During our testing for the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2023, DBH incurred $12,800,130 in subrecipient expenditures for this program and incorrectly reported that there were no subrecipient expenditures on the draft SEFA. The error was subsequently identified and corrected as a result of the audit process. While the subrecipient expenditure column was not accurate, the total expenditure column was accurately reported.
Questioned Costs – None.
Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample.
Effect – Without proper internal controls and policies and procedures in place to ensure that correct amounts were reported and were properly reviewed, the Opioid STR program:
• FAPIIS Reporting Compliance: DBH management did not report the necessary FAPIIS information for Opioid STR in accordance with Federal requirements.
• FFATA Reporting Compliance: DBH management did not report the necessary FFATA report for Opioid STR first-tier subawards over $30,000 to the FFATA Subaward Reporting System in accordance with FFATA requirements.
• FFR Controls over Reporting Compliance: There is an increased risk of errors occurring and going undetected, or errors being present in reports if no review and approval occurred.
• PPR Reporting Compliance: DBH cannot be assured that it reported complete and accurate information to enable the Substance Abuse and Mental Health Services Administration (SAMHSA), an operating division of the Department of Health and Human Services (HHS), to assess the outcomes of the State’s use of Opioid program funding.
• SEFA Reporting Compliance: The effect of the condition found is that the SEFA was not accurately prepared.
Cause – Management did not have proper internal controls and policies and procedures in place to ensure that the amounts on the FAPIIS, FFATA, FFR, PPR and SEFA were properly reported, and the reports were properly reviewed and approved.
Recommendation – We recommend the following:
• FAPIIS Reporting Compliance: We recommend DBH to evaluate its reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report information before it is submitted. Further, we recommend that DBH collect, and report complete and accurate information regarding FAPIIS.
• FFATA Reporting Compliance: We recommend DBH to evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website. Further, we recommend DBH collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act.
• FFR Controls over Reporting Compliance: We recommend DBH to design and implement procedures to ensure sufficient documentation is maintained that supports the review and approval of the FFR.
• PPR Reporting Compliance: We recommend DBH to develop formal, written procedures to identify the sources of information necessary and steps needed to compile accurate and complete information for the Opioid program performance reports; and retain in a central location all documentation that it used to support information included in each performance report it submits to the federal government.
• SEFA Reporting Compliance: We recommend DBH to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review its existing policies and procedures for preparing the Schedule of Expenditures of Federal Awards to ensure that it is complete and accurate.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH agrees with these findings and plans to address reporting requirements to ensure that the FAPIIS, FFATA, FFR, PPR and SEFA are completed accurately and on the required schedule. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-036
Prior Year Finding Number: N/A
Compliance Requirement: Subrecipient Monitoring
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Eligibility of Subrecipients: The Substance Abuse and Mental Health Services Administration (SAMHSA) promulgated the Funding Opportunity Announcement (FOA) No. TI-20-012 to seek applicants for the Opioid STR federal program. Page 67 of the FOA states “Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal award, including a portion of the scope of work or objectives. Grant recipients are responsible for ensuring that all subrecipients comply with the terms and conditions of the award, per 45 CFR Section 75.101.” This provision indicates that 45 CFR Section 75.202 applies to all grant agreements, including subawards. 45 CFR Section 75.202(b) requires the federal awarding agency must provide certain information about the federal award and states, in part (5), General Eligibility Requirements, The statutory, regulatory or other eligibility factors or considerations that determine the applicant’s qualification for Federal awards under the program (e.g., type of non-Federal entity).
Earmarking Requirements for Subrecipients: Award recipients must continue to comply with the requirements for subrecipients monitoring and management as outlined in the provisions of 45 CFR Section 75.351-352 and should ensure written subaward/subcontract agreements are in place. The written agreement must require that subrecipients comply with the same terms and conditions as the prime recipient, as applicable (i.e., financial management requirements, audit requirements, etc.) and should describe the scope of work, deliverables, etc. The grant agreements provide that the District may use no more than ten (10) percent of the total grant award for administrative costs and developing the infrastructure necessary for expansion of services. Also, no more than ten (10) percent of the total grant award may be used for data collection, performance measurement, and performance assessment, including incentives for participating in the required data collection follow-up.
Monitoring of Subrecipients: Uniform Guidance in 2 CFR Section 200.331(a) requires that pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions. Also, in accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – During our testing of Subrecipient Monitoring compliance requirement, we noted the following:
For Eligibility of Subrecipients: We identified ten (10) instances out of ten (10) tested, in which the subrecipients’ eligibility determination was not documented or maintained.
Earmarking Requirements for Subrecipients: During our testing of the State Targeted Response to the Opioid Crisis Program, we noted that the agency used a different established indirect cost rate in monitoring the earmarking of awardees than the maximum administrative costs/indirect costs. For three (3) out of ten (10) samples selected for testing, the awardees exceeded the ten (10) percent funding limitation for administrative costs/indirect costs. Also, DBH does not have a process to monitor the ten (10) percent earmarking requirement for costs of developing the infrastructure necessary for expansion of services; and for data collection, performance measurement, and performance assessment, including incentives for participating in the required data collection follow-up.
Monitoring of Subrecipients: Although, DBH performs risk assessment and site visits to monitor subrecipients, we noted three (3) instances out of ten (10) samples, in which the subrecipients’ site visit and/or risk assessment was not documented or maintained. In addition, DBH did not track subrecipient costs versus vendor costs within their financial reporting system, which resulted to issues in verifying the completeness and accuracy of subrecipient population.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DBH’s compliance with specified subrecipient monitoring requirements using a statistically valid sample.
Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved.
Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance.
Recommendation – We recommend that DBH maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls into place to resolve the issues. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-037
Prior Year Finding Number: N/A
Compliance Requirement: Special Tests and Provisions – Key Employees
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
2 CFR 200.508(d) says an auditee must “provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit required by this part.”
The grant agreements provide that the State must maintain certain key personnel. Key personnel are organization staff members or consultants/subrecipients who must be part of the project regardless of whether they receive a salary or compensation from the project. These individuals must make a substantial contribution to the execution of the project. Key Personnel for this program are the Project Director, Project Coordinator, and Data Coordinator at a 1.0 FTE (100 percent level of effort) for each position. This position requires prior approval by SAMHSA after a review of staff credentials and job descriptions. Any changes to key personnel, including level of effort involving separation from the project for more than three months or a 25 percent reduction in time dedicated to the project, requires prior approval, and must be submitted as a post-award amendment.
Condition – During our testing of the key personnel requirement, we noted that for three (3) key employees tested out of three (3), we were unable to review documentation to support that the employee worked 100% on the award as required by the grant agreement.
Questioned Costs – None.
Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample.
Effect – There is a risk that employees are working on the program that are not approved by the granting agency.
Cause – Management has not established internal control policies and procedures around communicating to the employees that they are being assigned to the Opioid program.
Recommendation – We recommend that DBH develop and implement policies, procedures and controls to ensure proper documentation of the required and actual time and effort from key employees in accordance with grant requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls into place to resolve the issues. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-001
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet.
Questioned Costs – Known amount is $28,093.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809.
Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-002
Prior Year Finding Number: N/A
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 277.4(b), Federal reimbursement rate, states that the base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
Condition – During the testing of the SNAP Matching, Level of Effort, Earmarking compliance requirement, we noted that the quarterly SF-425 reports were approved and certified, and DHS/ESA exceeded the required SNAP Matching amount of $34,983,777. However, OCFO for DHS/ESA was unable to provide supporting documentation that would allow us to agree specific amounts reported as the match for fiscal year 2023.
OCFO for DHS/ESA was unable to provide support to enable recalculation of the exact amounts reported for (1) Certification for the 4th quarter, (2) Education and Training (E&T) 50% Grant for each of the four quarters, and (3) for New Investment for the 4th quarter, which is not allowed to be included as a match but must be spent by the agency. The total calculated amount by OCFO for DHS/ESA to be reported as the required match on the SF-425 report, excluding New investment, was $36,603,773. However, the total recalculated amount by auditors to be reported as the required match was $37,315,738. Variance between these two amounts was $711,965.
Questioned Costs – None.
Context – This is a condition identified per review of DHS/ESA’s compliance through the OCFO team with specified requirements using a statistically valid sample.
Effect – OCFO for DHS/ESA is not in compliance with the stated provisions. Without adequate internal controls to ensure reconciliation of the amounts reported for the matching requirements, there is an increased risk that matching will not be properly reported.
Cause – OCFO for DHS/ESA does not have appear to have adequate policies and procedures in place to ensure that the amounts reported for the matching requirement agreed to the support.
Recommendation – We recommend that OCFO for DHS/ESA strengthen its policies and procedures to ensure that amounts reported for SNAP matching requirements are properly reported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-003
Prior Year Finding Number: 2022-001
Compliance Requirement: Special Tests and Provisions – ADP System for SNAP
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Department of Health Care Finance (DHCF) DC Access System (DCAS) Program Management Administration
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 272.10(a), “All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP.”
Per 2 CFR Section 272.10(b), “In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas (1) Certification and (2) Issuance Reconciliation and Reporting. Under Certification – States agencies must determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Also, State agencies must redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances.”
Condition – The District is self-reporting findings it noted from its ongoing efforts to resolve issues with the ADP system for SNAP. The issues identified and the estimated impact follows:
1. Failure to Send Correct and Timely Notices to SNAP Households - Notices pertaining to SNAP eligibility contain incorrect information, and/or SNAP applicants and recipients fail to receive proper notices. For example, in the Federal Fiscal Year (FFY) 2018 Local Program Access Review (PAR), Food and Nutrition Service (FNS) cited that SNAP applicants did not receive a Notice of Eligibility or notice contained incorrect information, no notice of required verification, and the notice of adverse action was incorrect.
2. Untimely Processing of SNAP Applications and Periodic Reports - On October 23, 2017, FNS advised DHS that its application processing timeliness (APT) rate between October 2016 and March 2017 was 88.45%, which triggered corrective action per FNS policy. Moreover, between that last APT report and now, DHS has disclosed that it has experienced processing backlogs of varying severity and persistence to FNS via ongoing communications and as part of waiver requests. DHS also provided a report to FNS in August 2022 that indicated significant application processing backlogs.
3. Establishment of Duplicate Accounts - DHS discovered that duplicate Product Delivery Cases (PDC) were being created in DCAS. One PDC was active and the other closed, but the closed PDC was still receiving benefits.
4. Issuance of Duplicate Payment - As a result of duplicate accounts in Deficiency 3, duplicate payments may have been issued to the same household when a caseworker reactivated a closed case. There is also a possibility that customers who received duplicate EBT cards from different EBT vendors may have received duplicate payments.
5. Failure to Implement Computer Matching System - Based on the FFY18 Program Integrity Management Evaluation (ME) review, DHS failed to process Prisoner Verification System (PVS) matches, deceased matches, and National Directory of New Hires (NDNH) matches in accordance with federal requirements.
6. Failure to Produce System Computations to Support Recipient Claims - DCAS does not have the ability to calculate overpayments or send a demand letter. FNS correspondence letters dated October 18, 2017, and September 20, 2018, advised DHS to suspend the establishment of DCAS claims but allowed DHS to continue servicing ACEDS claims.
7. Recipient Fraud Investigations, Hearings and Tracking System Unvalidated - As reported by DHS in the Advance Warning Letter (AWL) CAP, DHS has been using manual and other electronic systems, such as QuickBase, to meet federal recipient fraud requirements and related notices. Since then, DHS has been working on creating a fraud management system called Thomas Reuters (formerly Pondera), which went live on October 11, 2022. This finding remains open until FNS validates the system, including viewing a demo.
8. Treasury Offset Program (TOP) Reporting and Maintenance Decertified - FNS conducted a TOP Technical Review in June 2021 and DHS was decertified from TOP due to the following:
• Referral of customers to TOP that are undergoing recoupment.
• Incorrect determination of the date of delinquency.
• Incorrect debt balance and debt status in TOP.
9. Failure to Initiate Recoupment on Active Households - When DCAS launched in October 2016, more than 3,000 claim cases with outstanding balances originating from SNAP overpayments were converted from ACEDS to DCAS. Some claims were not properly converted or activated in DCAS. As a result, DHS failed to take the required recovery actions, including TOP recovery or activation of the recoupment process through EBT cards.
10. Recipient and Benefit Integrity Report Update Required - DHS must provide an update on the target completion dates for system generation of all SNAP-related reports currently being created through manual intervention. The plan must include the procedures for reviewing and ensuring the accuracy of the data being submitted to Food Programs Reporting System (FPRS) with particular emphasis on the FNS-209 and the FNS-366B reports. DHS experienced some technical challenges in processing and retrieving claim and recoupment information accurately since the launch of DCAS in October 2016, which affected the FNS-209 quarterly reports. The Payment and Collections Division (PCD) and the DCAS report development team have made concerted efforts to improve the ability to generate data for the reports but continue to have difficulties in verifying the accuracy of data due in part to the laborious manual processes involved. Based on the FFY 2018 Program Integrity ME review, lines 3b, 10, and 14 of the FNS-209 failed to reconcile with the detailed documentation.
11. Work Requirements Have Not Been Properly Implemented - DHS is not in compliance with the requirement to accurately report on the FNS 583. DHS is unprepared to implement the work requirement and time limit for able-bodied adults without dependents when the current suspension mandated by the Families First Coronavirus Response Act ends and/or its waiver ends. Additionally, the District is not prepared to apply the Able-Bodied Adults Without Dependents (ABAWD) time limits when their ABAWD waiver expires.
12. Minimum Benefit for Non-Categorically Eligible One/Two Person Households Not Issued to Eligible Households - As reported by DHS, the Federal minimum SNAP benefit is not issued to eligible one or two-person households unless those households are categorically eligible. As a result, one or two-person households that are not categorically eligible will not receive benefits to which they are entitled.
13. Medical Expense Deduction for Elderly and Disabled Households Not Configured in DCAS - As reported by DHS, certain allowable medical expense evidence is not configured in DCAS to allow a medical expense deduction. Certain allowable disability statuses selected in DCAS are not configured to allow a medical expense deduction. As a result, certain households with elderly or disabled members are not receiving a medical expense deduction.
14. Failure to Analyze Client Complaints and Include in the State’s Corrective Action Plans (CAP) Where Appropriate - DHS is failing to analyze client complaints and include in the State’s CAP where appropriate, per 7 CFR 271.6(a)(3) and 275.16.
15. The SNAP Application Does Not Clearly Explain Which Questions Are Required for SNAP - FNS reviewers found that the District’s SNAP application does not provide clear directions about which questions are required for SNAP, versus Cash or Medical Assistance. For example, Step 5 of the application asks “Does anyone in your household (including non-applicants) have any income? Yes – complete below; No – skip to step 6 (Complete if you are applying for Food, Medical, or Cash Assistance).” The directions are confusing and may be difficult to understand.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements resulting from a system implementation.
Effect – Without an effectively designed and operated system in place, ineligible beneficiaries may receive benefits under the SNAP grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Inaccurate beneficiary allotment payments could result in participants receiving benefits that they are not entitled to receive under the program.
Cause – DHS did not effectively design and operate the ADP system for SNAP which resulted to inaccurate benefit payments.
Recommendation – We recommend that DHS continue to evaluate and improve the new ADP system for SNAP to ensure that it addresses all the administration requirements of the SNAP program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS and DHCF DCAS team agree with the findings noted in this report. DHS self-reported these findings as part of the agency’s ongoing effort to maintain integrity with all eligibility determinations. The root cause of each of the fifteen (15) case issues with the ADP system for SNAP varied. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-004
Prior Year Finding Number: 2022-002
Compliance Requirement: Special Tests and Provisions – EBT Card Security
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Office of the Chief Financial Officer/Office of Finance and Treasury (OCFO/OFT)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR Section 274.8(b)(3), As an addition to or component of the Security Program required of Automated Data Processing (ADP) systems, the State agency shall ensure that the following electronic benefits transfer (EBT) security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center;
(iii) Message validation;
(iv) Administrative and operational procedures;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for ADP systems. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system – (B) Completeness and timeliness of the reconciliation system; and
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
Condition – OCFO/OFT for DHS are required to maintain adequate security over, and documentation/records for EBT cards, to prevent their theft, embezzlement, loss damage, destruction, unauthorized transfer, negotiation, or use. OCFO/OFT have contracted with Fidelity National Information Service (FIS) for the issuance and security of the EBT cards; however, it is OCFO/OFT’s ultimate responsibility to ensure the contractor has controls in place to maintain adequate security over, and documentation/records of EBT cards. During our tests of the design and implementation of internal controls, we noted the following issues:
• For nine (9) out of the 60 samples, although both EBT Balance Sheets reconciled with the EBT Card Issuance Logs included in the package, we noted the following deficiencies:
o For one (1) out of the samples, we noted that for at least one (1) customer, the client’s name was missing from the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer on the United Planning Organization (UPO) Intake Form, the ID type for identification purposes was missing.
o For two (2) out of the samples, we noted that for at least one (1) customer the case number was cancelled but no new/correct case number indicated on the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer the identification type was noted as referral on the EBT Intake Form, but no referral form was attached.
o For one (1) out of the samples, we noted that for at least one (1) customer the DHS Photo ID Program Referral Form was missing the supervisor's signature and only had the eligibility staff’s signature.
o For one (1) out of the samples, we noted that for at least one (1) customer, the name of the beneficiary in the intake forms does not agree with the EBT Issuance Log.
Questioned Costs – None.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without adequate internal controls to ensure compliance with EBT Card Security requirements, there is an increased risk that the inventory of EBT cards will not be properly maintained and accounted for.
Cause – OCFO/OFT for DHS does not have adequate policies and procedures in place to ensure adequate safeguarding, documentation over issuance and monitoring of EBT cards.
Recommendation - We recommend that OCFO/OFT for DHS strengthen formal policies and procedures to maintain adequate security over, and documentation/records for EBT Cards.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The OCFO/OFT for DHS concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-001
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet.
Questioned Costs – Known amount is $28,093.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809.
Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-002
Prior Year Finding Number: N/A
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 277.4(b), Federal reimbursement rate, states that the base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
Condition – During the testing of the SNAP Matching, Level of Effort, Earmarking compliance requirement, we noted that the quarterly SF-425 reports were approved and certified, and DHS/ESA exceeded the required SNAP Matching amount of $34,983,777. However, OCFO for DHS/ESA was unable to provide supporting documentation that would allow us to agree specific amounts reported as the match for fiscal year 2023.
OCFO for DHS/ESA was unable to provide support to enable recalculation of the exact amounts reported for (1) Certification for the 4th quarter, (2) Education and Training (E&T) 50% Grant for each of the four quarters, and (3) for New Investment for the 4th quarter, which is not allowed to be included as a match but must be spent by the agency. The total calculated amount by OCFO for DHS/ESA to be reported as the required match on the SF-425 report, excluding New investment, was $36,603,773. However, the total recalculated amount by auditors to be reported as the required match was $37,315,738. Variance between these two amounts was $711,965.
Questioned Costs – None.
Context – This is a condition identified per review of DHS/ESA’s compliance through the OCFO team with specified requirements using a statistically valid sample.
Effect – OCFO for DHS/ESA is not in compliance with the stated provisions. Without adequate internal controls to ensure reconciliation of the amounts reported for the matching requirements, there is an increased risk that matching will not be properly reported.
Cause – OCFO for DHS/ESA does not have appear to have adequate policies and procedures in place to ensure that the amounts reported for the matching requirement agreed to the support.
Recommendation – We recommend that OCFO for DHS/ESA strengthen its policies and procedures to ensure that amounts reported for SNAP matching requirements are properly reported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-003
Prior Year Finding Number: 2022-001
Compliance Requirement: Special Tests and Provisions – ADP System for SNAP
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Department of Health Care Finance (DHCF) DC Access System (DCAS) Program Management Administration
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 272.10(a), “All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP.”
Per 2 CFR Section 272.10(b), “In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas (1) Certification and (2) Issuance Reconciliation and Reporting. Under Certification – States agencies must determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Also, State agencies must redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances.”
Condition – The District is self-reporting findings it noted from its ongoing efforts to resolve issues with the ADP system for SNAP. The issues identified and the estimated impact follows:
1. Failure to Send Correct and Timely Notices to SNAP Households - Notices pertaining to SNAP eligibility contain incorrect information, and/or SNAP applicants and recipients fail to receive proper notices. For example, in the Federal Fiscal Year (FFY) 2018 Local Program Access Review (PAR), Food and Nutrition Service (FNS) cited that SNAP applicants did not receive a Notice of Eligibility or notice contained incorrect information, no notice of required verification, and the notice of adverse action was incorrect.
2. Untimely Processing of SNAP Applications and Periodic Reports - On October 23, 2017, FNS advised DHS that its application processing timeliness (APT) rate between October 2016 and March 2017 was 88.45%, which triggered corrective action per FNS policy. Moreover, between that last APT report and now, DHS has disclosed that it has experienced processing backlogs of varying severity and persistence to FNS via ongoing communications and as part of waiver requests. DHS also provided a report to FNS in August 2022 that indicated significant application processing backlogs.
3. Establishment of Duplicate Accounts - DHS discovered that duplicate Product Delivery Cases (PDC) were being created in DCAS. One PDC was active and the other closed, but the closed PDC was still receiving benefits.
4. Issuance of Duplicate Payment - As a result of duplicate accounts in Deficiency 3, duplicate payments may have been issued to the same household when a caseworker reactivated a closed case. There is also a possibility that customers who received duplicate EBT cards from different EBT vendors may have received duplicate payments.
5. Failure to Implement Computer Matching System - Based on the FFY18 Program Integrity Management Evaluation (ME) review, DHS failed to process Prisoner Verification System (PVS) matches, deceased matches, and National Directory of New Hires (NDNH) matches in accordance with federal requirements.
6. Failure to Produce System Computations to Support Recipient Claims - DCAS does not have the ability to calculate overpayments or send a demand letter. FNS correspondence letters dated October 18, 2017, and September 20, 2018, advised DHS to suspend the establishment of DCAS claims but allowed DHS to continue servicing ACEDS claims.
7. Recipient Fraud Investigations, Hearings and Tracking System Unvalidated - As reported by DHS in the Advance Warning Letter (AWL) CAP, DHS has been using manual and other electronic systems, such as QuickBase, to meet federal recipient fraud requirements and related notices. Since then, DHS has been working on creating a fraud management system called Thomas Reuters (formerly Pondera), which went live on October 11, 2022. This finding remains open until FNS validates the system, including viewing a demo.
8. Treasury Offset Program (TOP) Reporting and Maintenance Decertified - FNS conducted a TOP Technical Review in June 2021 and DHS was decertified from TOP due to the following:
• Referral of customers to TOP that are undergoing recoupment.
• Incorrect determination of the date of delinquency.
• Incorrect debt balance and debt status in TOP.
9. Failure to Initiate Recoupment on Active Households - When DCAS launched in October 2016, more than 3,000 claim cases with outstanding balances originating from SNAP overpayments were converted from ACEDS to DCAS. Some claims were not properly converted or activated in DCAS. As a result, DHS failed to take the required recovery actions, including TOP recovery or activation of the recoupment process through EBT cards.
10. Recipient and Benefit Integrity Report Update Required - DHS must provide an update on the target completion dates for system generation of all SNAP-related reports currently being created through manual intervention. The plan must include the procedures for reviewing and ensuring the accuracy of the data being submitted to Food Programs Reporting System (FPRS) with particular emphasis on the FNS-209 and the FNS-366B reports. DHS experienced some technical challenges in processing and retrieving claim and recoupment information accurately since the launch of DCAS in October 2016, which affected the FNS-209 quarterly reports. The Payment and Collections Division (PCD) and the DCAS report development team have made concerted efforts to improve the ability to generate data for the reports but continue to have difficulties in verifying the accuracy of data due in part to the laborious manual processes involved. Based on the FFY 2018 Program Integrity ME review, lines 3b, 10, and 14 of the FNS-209 failed to reconcile with the detailed documentation.
11. Work Requirements Have Not Been Properly Implemented - DHS is not in compliance with the requirement to accurately report on the FNS 583. DHS is unprepared to implement the work requirement and time limit for able-bodied adults without dependents when the current suspension mandated by the Families First Coronavirus Response Act ends and/or its waiver ends. Additionally, the District is not prepared to apply the Able-Bodied Adults Without Dependents (ABAWD) time limits when their ABAWD waiver expires.
12. Minimum Benefit for Non-Categorically Eligible One/Two Person Households Not Issued to Eligible Households - As reported by DHS, the Federal minimum SNAP benefit is not issued to eligible one or two-person households unless those households are categorically eligible. As a result, one or two-person households that are not categorically eligible will not receive benefits to which they are entitled.
13. Medical Expense Deduction for Elderly and Disabled Households Not Configured in DCAS - As reported by DHS, certain allowable medical expense evidence is not configured in DCAS to allow a medical expense deduction. Certain allowable disability statuses selected in DCAS are not configured to allow a medical expense deduction. As a result, certain households with elderly or disabled members are not receiving a medical expense deduction.
14. Failure to Analyze Client Complaints and Include in the State’s Corrective Action Plans (CAP) Where Appropriate - DHS is failing to analyze client complaints and include in the State’s CAP where appropriate, per 7 CFR 271.6(a)(3) and 275.16.
15. The SNAP Application Does Not Clearly Explain Which Questions Are Required for SNAP - FNS reviewers found that the District’s SNAP application does not provide clear directions about which questions are required for SNAP, versus Cash or Medical Assistance. For example, Step 5 of the application asks “Does anyone in your household (including non-applicants) have any income? Yes – complete below; No – skip to step 6 (Complete if you are applying for Food, Medical, or Cash Assistance).” The directions are confusing and may be difficult to understand.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements resulting from a system implementation.
Effect – Without an effectively designed and operated system in place, ineligible beneficiaries may receive benefits under the SNAP grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Inaccurate beneficiary allotment payments could result in participants receiving benefits that they are not entitled to receive under the program.
Cause – DHS did not effectively design and operate the ADP system for SNAP which resulted to inaccurate benefit payments.
Recommendation – We recommend that DHS continue to evaluate and improve the new ADP system for SNAP to ensure that it addresses all the administration requirements of the SNAP program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS and DHCF DCAS team agree with the findings noted in this report. DHS self-reported these findings as part of the agency’s ongoing effort to maintain integrity with all eligibility determinations. The root cause of each of the fifteen (15) case issues with the ADP system for SNAP varied. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-004
Prior Year Finding Number: 2022-002
Compliance Requirement: Special Tests and Provisions – EBT Card Security
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Office of the Chief Financial Officer/Office of Finance and Treasury (OCFO/OFT)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR Section 274.8(b)(3), As an addition to or component of the Security Program required of Automated Data Processing (ADP) systems, the State agency shall ensure that the following electronic benefits transfer (EBT) security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center;
(iii) Message validation;
(iv) Administrative and operational procedures;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for ADP systems. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system – (B) Completeness and timeliness of the reconciliation system; and
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
Condition – OCFO/OFT for DHS are required to maintain adequate security over, and documentation/records for EBT cards, to prevent their theft, embezzlement, loss damage, destruction, unauthorized transfer, negotiation, or use. OCFO/OFT have contracted with Fidelity National Information Service (FIS) for the issuance and security of the EBT cards; however, it is OCFO/OFT’s ultimate responsibility to ensure the contractor has controls in place to maintain adequate security over, and documentation/records of EBT cards. During our tests of the design and implementation of internal controls, we noted the following issues:
• For nine (9) out of the 60 samples, although both EBT Balance Sheets reconciled with the EBT Card Issuance Logs included in the package, we noted the following deficiencies:
o For one (1) out of the samples, we noted that for at least one (1) customer, the client’s name was missing from the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer on the United Planning Organization (UPO) Intake Form, the ID type for identification purposes was missing.
o For two (2) out of the samples, we noted that for at least one (1) customer the case number was cancelled but no new/correct case number indicated on the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer the identification type was noted as referral on the EBT Intake Form, but no referral form was attached.
o For one (1) out of the samples, we noted that for at least one (1) customer the DHS Photo ID Program Referral Form was missing the supervisor's signature and only had the eligibility staff’s signature.
o For one (1) out of the samples, we noted that for at least one (1) customer, the name of the beneficiary in the intake forms does not agree with the EBT Issuance Log.
Questioned Costs – None.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without adequate internal controls to ensure compliance with EBT Card Security requirements, there is an increased risk that the inventory of EBT cards will not be properly maintained and accounted for.
Cause – OCFO/OFT for DHS does not have adequate policies and procedures in place to ensure adequate safeguarding, documentation over issuance and monitoring of EBT cards.
Recommendation - We recommend that OCFO/OFT for DHS strengthen formal policies and procedures to maintain adequate security over, and documentation/records for EBT Cards.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The OCFO/OFT for DHS concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-001
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet.
Questioned Costs – Known amount is $28,093.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809.
Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-002
Prior Year Finding Number: N/A
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 277.4(b), Federal reimbursement rate, states that the base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
Condition – During the testing of the SNAP Matching, Level of Effort, Earmarking compliance requirement, we noted that the quarterly SF-425 reports were approved and certified, and DHS/ESA exceeded the required SNAP Matching amount of $34,983,777. However, OCFO for DHS/ESA was unable to provide supporting documentation that would allow us to agree specific amounts reported as the match for fiscal year 2023.
OCFO for DHS/ESA was unable to provide support to enable recalculation of the exact amounts reported for (1) Certification for the 4th quarter, (2) Education and Training (E&T) 50% Grant for each of the four quarters, and (3) for New Investment for the 4th quarter, which is not allowed to be included as a match but must be spent by the agency. The total calculated amount by OCFO for DHS/ESA to be reported as the required match on the SF-425 report, excluding New investment, was $36,603,773. However, the total recalculated amount by auditors to be reported as the required match was $37,315,738. Variance between these two amounts was $711,965.
Questioned Costs – None.
Context – This is a condition identified per review of DHS/ESA’s compliance through the OCFO team with specified requirements using a statistically valid sample.
Effect – OCFO for DHS/ESA is not in compliance with the stated provisions. Without adequate internal controls to ensure reconciliation of the amounts reported for the matching requirements, there is an increased risk that matching will not be properly reported.
Cause – OCFO for DHS/ESA does not have appear to have adequate policies and procedures in place to ensure that the amounts reported for the matching requirement agreed to the support.
Recommendation – We recommend that OCFO for DHS/ESA strengthen its policies and procedures to ensure that amounts reported for SNAP matching requirements are properly reported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-003
Prior Year Finding Number: 2022-001
Compliance Requirement: Special Tests and Provisions – ADP System for SNAP
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Department of Health Care Finance (DHCF) DC Access System (DCAS) Program Management Administration
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 272.10(a), “All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP.”
Per 2 CFR Section 272.10(b), “In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas (1) Certification and (2) Issuance Reconciliation and Reporting. Under Certification – States agencies must determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Also, State agencies must redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances.”
Condition – The District is self-reporting findings it noted from its ongoing efforts to resolve issues with the ADP system for SNAP. The issues identified and the estimated impact follows:
1. Failure to Send Correct and Timely Notices to SNAP Households - Notices pertaining to SNAP eligibility contain incorrect information, and/or SNAP applicants and recipients fail to receive proper notices. For example, in the Federal Fiscal Year (FFY) 2018 Local Program Access Review (PAR), Food and Nutrition Service (FNS) cited that SNAP applicants did not receive a Notice of Eligibility or notice contained incorrect information, no notice of required verification, and the notice of adverse action was incorrect.
2. Untimely Processing of SNAP Applications and Periodic Reports - On October 23, 2017, FNS advised DHS that its application processing timeliness (APT) rate between October 2016 and March 2017 was 88.45%, which triggered corrective action per FNS policy. Moreover, between that last APT report and now, DHS has disclosed that it has experienced processing backlogs of varying severity and persistence to FNS via ongoing communications and as part of waiver requests. DHS also provided a report to FNS in August 2022 that indicated significant application processing backlogs.
3. Establishment of Duplicate Accounts - DHS discovered that duplicate Product Delivery Cases (PDC) were being created in DCAS. One PDC was active and the other closed, but the closed PDC was still receiving benefits.
4. Issuance of Duplicate Payment - As a result of duplicate accounts in Deficiency 3, duplicate payments may have been issued to the same household when a caseworker reactivated a closed case. There is also a possibility that customers who received duplicate EBT cards from different EBT vendors may have received duplicate payments.
5. Failure to Implement Computer Matching System - Based on the FFY18 Program Integrity Management Evaluation (ME) review, DHS failed to process Prisoner Verification System (PVS) matches, deceased matches, and National Directory of New Hires (NDNH) matches in accordance with federal requirements.
6. Failure to Produce System Computations to Support Recipient Claims - DCAS does not have the ability to calculate overpayments or send a demand letter. FNS correspondence letters dated October 18, 2017, and September 20, 2018, advised DHS to suspend the establishment of DCAS claims but allowed DHS to continue servicing ACEDS claims.
7. Recipient Fraud Investigations, Hearings and Tracking System Unvalidated - As reported by DHS in the Advance Warning Letter (AWL) CAP, DHS has been using manual and other electronic systems, such as QuickBase, to meet federal recipient fraud requirements and related notices. Since then, DHS has been working on creating a fraud management system called Thomas Reuters (formerly Pondera), which went live on October 11, 2022. This finding remains open until FNS validates the system, including viewing a demo.
8. Treasury Offset Program (TOP) Reporting and Maintenance Decertified - FNS conducted a TOP Technical Review in June 2021 and DHS was decertified from TOP due to the following:
• Referral of customers to TOP that are undergoing recoupment.
• Incorrect determination of the date of delinquency.
• Incorrect debt balance and debt status in TOP.
9. Failure to Initiate Recoupment on Active Households - When DCAS launched in October 2016, more than 3,000 claim cases with outstanding balances originating from SNAP overpayments were converted from ACEDS to DCAS. Some claims were not properly converted or activated in DCAS. As a result, DHS failed to take the required recovery actions, including TOP recovery or activation of the recoupment process through EBT cards.
10. Recipient and Benefit Integrity Report Update Required - DHS must provide an update on the target completion dates for system generation of all SNAP-related reports currently being created through manual intervention. The plan must include the procedures for reviewing and ensuring the accuracy of the data being submitted to Food Programs Reporting System (FPRS) with particular emphasis on the FNS-209 and the FNS-366B reports. DHS experienced some technical challenges in processing and retrieving claim and recoupment information accurately since the launch of DCAS in October 2016, which affected the FNS-209 quarterly reports. The Payment and Collections Division (PCD) and the DCAS report development team have made concerted efforts to improve the ability to generate data for the reports but continue to have difficulties in verifying the accuracy of data due in part to the laborious manual processes involved. Based on the FFY 2018 Program Integrity ME review, lines 3b, 10, and 14 of the FNS-209 failed to reconcile with the detailed documentation.
11. Work Requirements Have Not Been Properly Implemented - DHS is not in compliance with the requirement to accurately report on the FNS 583. DHS is unprepared to implement the work requirement and time limit for able-bodied adults without dependents when the current suspension mandated by the Families First Coronavirus Response Act ends and/or its waiver ends. Additionally, the District is not prepared to apply the Able-Bodied Adults Without Dependents (ABAWD) time limits when their ABAWD waiver expires.
12. Minimum Benefit for Non-Categorically Eligible One/Two Person Households Not Issued to Eligible Households - As reported by DHS, the Federal minimum SNAP benefit is not issued to eligible one or two-person households unless those households are categorically eligible. As a result, one or two-person households that are not categorically eligible will not receive benefits to which they are entitled.
13. Medical Expense Deduction for Elderly and Disabled Households Not Configured in DCAS - As reported by DHS, certain allowable medical expense evidence is not configured in DCAS to allow a medical expense deduction. Certain allowable disability statuses selected in DCAS are not configured to allow a medical expense deduction. As a result, certain households with elderly or disabled members are not receiving a medical expense deduction.
14. Failure to Analyze Client Complaints and Include in the State’s Corrective Action Plans (CAP) Where Appropriate - DHS is failing to analyze client complaints and include in the State’s CAP where appropriate, per 7 CFR 271.6(a)(3) and 275.16.
15. The SNAP Application Does Not Clearly Explain Which Questions Are Required for SNAP - FNS reviewers found that the District’s SNAP application does not provide clear directions about which questions are required for SNAP, versus Cash or Medical Assistance. For example, Step 5 of the application asks “Does anyone in your household (including non-applicants) have any income? Yes – complete below; No – skip to step 6 (Complete if you are applying for Food, Medical, or Cash Assistance).” The directions are confusing and may be difficult to understand.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements resulting from a system implementation.
Effect – Without an effectively designed and operated system in place, ineligible beneficiaries may receive benefits under the SNAP grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements. Inaccurate beneficiary allotment payments could result in participants receiving benefits that they are not entitled to receive under the program.
Cause – DHS did not effectively design and operate the ADP system for SNAP which resulted to inaccurate benefit payments.
Recommendation – We recommend that DHS continue to evaluate and improve the new ADP system for SNAP to ensure that it addresses all the administration requirements of the SNAP program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS and DHCF DCAS team agree with the findings noted in this report. DHS self-reported these findings as part of the agency’s ongoing effort to maintain integrity with all eligibility determinations. The root cause of each of the fifteen (15) case issues with the ADP system for SNAP varied. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-004
Prior Year Finding Number: 2022-002
Compliance Requirement: Special Tests and Provisions – EBT Card Security
Program: Government Department/Agency:
U.S. Department of Agriculture
Supplemental Nutrition Assistance Program Cluster (SNAP)
ALN: 10.551, 10.561
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Office of the Chief Financial Officer/Office of Finance and Treasury (OCFO/OFT)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR Section 274.8(b)(3), As an addition to or component of the Security Program required of Automated Data Processing (ADP) systems, the State agency shall ensure that the following electronic benefits transfer (EBT) security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center;
(iii) Message validation;
(iv) Administrative and operational procedures;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for ADP systems. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system – (B) Completeness and timeliness of the reconciliation system; and
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
Condition – OCFO/OFT for DHS are required to maintain adequate security over, and documentation/records for EBT cards, to prevent their theft, embezzlement, loss damage, destruction, unauthorized transfer, negotiation, or use. OCFO/OFT have contracted with Fidelity National Information Service (FIS) for the issuance and security of the EBT cards; however, it is OCFO/OFT’s ultimate responsibility to ensure the contractor has controls in place to maintain adequate security over, and documentation/records of EBT cards. During our tests of the design and implementation of internal controls, we noted the following issues:
• For nine (9) out of the 60 samples, although both EBT Balance Sheets reconciled with the EBT Card Issuance Logs included in the package, we noted the following deficiencies:
o For one (1) out of the samples, we noted that for at least one (1) customer, the client’s name was missing from the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer on the United Planning Organization (UPO) Intake Form, the ID type for identification purposes was missing.
o For two (2) out of the samples, we noted that for at least one (1) customer the case number was cancelled but no new/correct case number indicated on the EBT Intake Form.
o For two (2) out of the samples, we noted that for at least one (1) customer the identification type was noted as referral on the EBT Intake Form, but no referral form was attached.
o For one (1) out of the samples, we noted that for at least one (1) customer the DHS Photo ID Program Referral Form was missing the supervisor's signature and only had the eligibility staff’s signature.
o For one (1) out of the samples, we noted that for at least one (1) customer, the name of the beneficiary in the intake forms does not agree with the EBT Issuance Log.
Questioned Costs – None.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without adequate internal controls to ensure compliance with EBT Card Security requirements, there is an increased risk that the inventory of EBT cards will not be properly maintained and accounted for.
Cause – OCFO/OFT for DHS does not have adequate policies and procedures in place to ensure adequate safeguarding, documentation over issuance and monitoring of EBT cards.
Recommendation - We recommend that OCFO/OFT for DHS strengthen formal policies and procedures to maintain adequate security over, and documentation/records for EBT Cards.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The OCFO/OFT for DHS concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-005
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Condition – From a sample of 40 payroll transactions, we noted five (5) transactions for one employee that did not work on the program, thus, there should be no hours charged to the program during the year. Per review of the total payroll charged to the program for the year for this employee, we noted $32,290 that should not have been charged to the program.
Questioned Costs – Known amount is $32,290.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the WIC program in fiscal year 2023 were $1,073,965.
Effect – DC Health was unable to demonstrate that the payroll expenditures charged to the WIC program were allowable expenses in accordance with 2 CFR Part 200.430.
Cause – DC Health did not adhere to its internal control policies and procedures for reviewing the eligibility and allowability of payroll expenditures charged to the WIC program.
Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that only allowable expenses are charged to the program as required by 2 CFR 200.430.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. DC Health complies with local and federal requirements for regular and routine review of budgeted employee time and alignment with allowable costs and hours worked. Staff duties are documented in performance plans, SMART goals, logs/calendars and reports revised by supervisors. The exception found in the sample was corrected in January 2024 when the employee was found to be budgeted partly on the WIC grant. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-006
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR 246.16a (c) Rebate contracts with infant formula manufacturers are authorized as a cost containment measure. Rebates represent a reduction of expenditures previously incurred for WIC food benefit costs. Applying the rebates received to such costs enabled the DC Health to extend program benefits to more participants than could have been serviced this fiscal year in the absence of the rebate contract.
Condition – During our review of five (5) rebate samples, we found that for one (1) rebate amounting to $4,639, DC Health was unable to provide the invoice to support the rebate credit received in October 2022.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. We sampled $1,085,404 of the population of $3,351,591.
Effect – Without strict adherence to policies and procedures, there is no assurance that food rebates are accurately reviewed and approved before being claimed for credit.
Cause – DC Health did not follow its own internal control policies and procedures for reviewing rebates submitted for credit.
Recommendation – We recommend that DC Health strictly adhere to its policies and procedures to ensure that rebates are reviewed and approved before claiming for credit.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. Contributing factors include absence of an internal policy and procedure outlining the annual process for the service provider, to submit supporting documentation to DC WIC for review and approval prior to receipt of the annual rebate. This internal control would have alerted WIC staff to contact the service provider last year, when they did not email a cover letter to DC WIC as supporting documentation for the annual vendor’s rebate. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-007
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR § 246.7 - Certification of participants:
“246.7 (d)(v) - (v) Are applicants required to document income eligibility?
(A) Adjunctively/automatically income eligible applicants. The State or local agency must require applicants determined to be adjunctively or automatically income eligible to document their eligibility for the program that makes them income eligible as set forth in paragraph (d)(2)(vi) of this section.
(B) Other applicants. The State or local agency must require all other applicants to provide documentation of family income at certification.”
Condition – During testing over individual eligibility for the WIC program benefits, we noted the following exception:
• BDO identified one (1) instance out of forty (40) samples where "COVID Self-declared" was accepted as proof of income for determining eligibility under the WIC program, which is no longer valid for income determination.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample.
Effect – Due to lack of operating effectiveness of controls and non-compliance with program requirements, there is no assurance over income eligibility under the WIC program for individual participants.
Cause – DC Health did not adhere to the required internal control procedures over income eligibility determinations to ensure that certifications are issued to eligible individuals.
Recommendation – We recommend that DC Health implement internal control procedures to ensure income eligibility determinations are made accurately in compliance with the program requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. The internal control deficiencies identified are a result of a combination of grantee staff turnover, change in federal WIC policy after the end of the public health emergency and the continued existence of pandemic era terminology in DC WIC’s management information system. In fiscal year 2024, The DC WIC Program implemented several quality assurance activities that are aimed at resetting the program back to normal operations pre-pandemic. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-005
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Condition – From a sample of 40 payroll transactions, we noted five (5) transactions for one employee that did not work on the program, thus, there should be no hours charged to the program during the year. Per review of the total payroll charged to the program for the year for this employee, we noted $32,290 that should not have been charged to the program.
Questioned Costs – Known amount is $32,290.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the WIC program in fiscal year 2023 were $1,073,965.
Effect – DC Health was unable to demonstrate that the payroll expenditures charged to the WIC program were allowable expenses in accordance with 2 CFR Part 200.430.
Cause – DC Health did not adhere to its internal control policies and procedures for reviewing the eligibility and allowability of payroll expenditures charged to the WIC program.
Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that only allowable expenses are charged to the program as required by 2 CFR 200.430.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. DC Health complies with local and federal requirements for regular and routine review of budgeted employee time and alignment with allowable costs and hours worked. Staff duties are documented in performance plans, SMART goals, logs/calendars and reports revised by supervisors. The exception found in the sample was corrected in January 2024 when the employee was found to be budgeted partly on the WIC grant. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-006
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR 246.16a (c) Rebate contracts with infant formula manufacturers are authorized as a cost containment measure. Rebates represent a reduction of expenditures previously incurred for WIC food benefit costs. Applying the rebates received to such costs enabled the DC Health to extend program benefits to more participants than could have been serviced this fiscal year in the absence of the rebate contract.
Condition – During our review of five (5) rebate samples, we found that for one (1) rebate amounting to $4,639, DC Health was unable to provide the invoice to support the rebate credit received in October 2022.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. We sampled $1,085,404 of the population of $3,351,591.
Effect – Without strict adherence to policies and procedures, there is no assurance that food rebates are accurately reviewed and approved before being claimed for credit.
Cause – DC Health did not follow its own internal control policies and procedures for reviewing rebates submitted for credit.
Recommendation – We recommend that DC Health strictly adhere to its policies and procedures to ensure that rebates are reviewed and approved before claiming for credit.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. Contributing factors include absence of an internal policy and procedure outlining the annual process for the service provider, to submit supporting documentation to DC WIC for review and approval prior to receipt of the annual rebate. This internal control would have alerted WIC staff to contact the service provider last year, when they did not email a cover letter to DC WIC as supporting documentation for the annual vendor’s rebate. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-007
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Agriculture
Special Supplemental Nutrition Program for Women, Infants and Children (WIC)
ALN: 10.557
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 7 CFR § 246.7 - Certification of participants:
“246.7 (d)(v) - (v) Are applicants required to document income eligibility?
(A) Adjunctively/automatically income eligible applicants. The State or local agency must require applicants determined to be adjunctively or automatically income eligible to document their eligibility for the program that makes them income eligible as set forth in paragraph (d)(2)(vi) of this section.
(B) Other applicants. The State or local agency must require all other applicants to provide documentation of family income at certification.”
Condition – During testing over individual eligibility for the WIC program benefits, we noted the following exception:
• BDO identified one (1) instance out of forty (40) samples where "COVID Self-declared" was accepted as proof of income for determining eligibility under the WIC program, which is no longer valid for income determination.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample.
Effect – Due to lack of operating effectiveness of controls and non-compliance with program requirements, there is no assurance over income eligibility under the WIC program for individual participants.
Cause – DC Health did not adhere to the required internal control procedures over income eligibility determinations to ensure that certifications are issued to eligible individuals.
Recommendation – We recommend that DC Health implement internal control procedures to ensure income eligibility determinations are made accurately in compliance with the program requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. The internal control deficiencies identified are a result of a combination of grantee staff turnover, change in federal WIC policy after the end of the public health emergency and the continued existence of pandemic era terminology in DC WIC’s management information system. In fiscal year 2024, The DC WIC Program implemented several quality assurance activities that are aimed at resetting the program back to normal operations pre-pandemic. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-008
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Housing and Urban Development
Community Development Block Grants Section 108 Loan Guarantees
ALN: 14.248
Award #: 2000150
Award Year: 10/01/2022 – 09/30/2023 Department of Housing and
Community Development (DHCD)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
2 CFR Part 170 Appendix A, “Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency (see definitions in paragraph e. of this award term). The non-Federal entity or Federal agency must report each obligating action described in paragraph a.1. of this award term to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify.”
Condition – During our audit, we noted the Agency did not submit the required Federal Financial Assistance Subject to the Transparency Act (FFATA) Report through Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) website.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCD’s compliance with specified requirements.
Effect – Failure to properly submit the FFATA report results in noncompliance for the Community Development Block Grants Section 108 Loan Guarantees program.
Cause – Per discussion with Grants Manager and Compliance Officer, DHCD was unable to enter the data into FSRS as a result of a system error. In lieu of reporting to FSRS, DHCD keeps track of the FFATA amounts by memo and aging schedule approved by Agency Fiscal Officer.
Recommendation – We recommend that DHCD resolve issues preventing them from properly submitting the FFATA Report through FSRS.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the conditions and recommendations of this finding. DHCD could not submit its Community Development Block Grants Section 108 Loan Guarantees program FFATA Report in the FSRS. The District’s Department of Human Services (DHS)’ Data Universal Numbering System (DUNS)/Unique Entity (UEI) number was used on all District’s Housing and Urban Development (HUD) grant agreements for the fiscal year. DHCD notified HUD Field Office of the error, which was corrected on the District’s fiscal year 2024 federal grant agreements with HUD. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-009
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Labor
Unemployment Insurance
ALN: 17.225
Award #: UI-37216-22-55-A-11
Award Year: 10/01/2021 – 12/31/2024 Department of Employment Services (DOES)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 200.510(b), Schedule of Expenditures of Federal awards, states that the auditee must also 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 2 CFR section 200.502, Basis for determining Federal Awards expended.
Condition – During our review of grant carryover analysis in relation to the fiscal year 2023 audit, we noted that DOES recorded $3.3 million of federal administrative expenditures in the current year SEFA in excess of the overall grant award amount for Unemployment Insurance program Award #UI-37216-22-55-A-11. BDO noted that the amount is related to the year-end closing entry reconciling DIFS R100 vs. R51 and should have been reversed in fiscal year 2023. The SEFA was adjusted to reflect the correct amount of expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the actual vs. budgeted expenditure for the Unemployment Insurance grant.
Effect – DOES is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DOES did not adhere to internal control procedures to reasonably ensure that the SEFA be fairly presented.
Recommendation – We recommend that DOES adhere to internal control procedures to reasonably ensure that expenditures do not exceed budget or grant award amounts.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOES concurs with this finding. The introduction of the new financial system resulted in the creation of several clearing accounts, necessitating ongoing monitoring and adjustments. One such account is the PNG Clearing Account. The specific transaction in question arose from a general ledger adjustment made during the fiscal year 2023 year-end close to reconcile outstanding balances within the PNG clearing account. This adjustment occurred subsequent to the closure of the subledger, prompting corrections at the source and resulting in discrepancies between subledger and general ledger balances.
Management has taken prompt action to address this issue by rectifying discrepancies in the SEFA. Additionally, as part of a agency-wide remediation, we have implemented enhanced controls to facilitate timely reconciliation of subledgers with the general ledger, thus mitigating the risk of future discrepancies. It is important to highlight that this incident is an isolated occurrence within the context of the grant program, stemming from the transition to a new financial system, process changes, and the introduction of subledgers. Importantly, this discrepancy pertains solely to the initial SEFA amount based on general ledger reporting and does not impact federal reporting to the grantor, which is based on subledger data. Furthermore, it does not indicate overspending of federal resources.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-009
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Labor
Unemployment Insurance
ALN: 17.225
Award #: UI-37216-22-55-A-11
Award Year: 10/01/2021 – 12/31/2024 Department of Employment Services (DOES)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 200.510(b), Schedule of Expenditures of Federal awards, states that the auditee must also 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 2 CFR section 200.502, Basis for determining Federal Awards expended.
Condition – During our review of grant carryover analysis in relation to the fiscal year 2023 audit, we noted that DOES recorded $3.3 million of federal administrative expenditures in the current year SEFA in excess of the overall grant award amount for Unemployment Insurance program Award #UI-37216-22-55-A-11. BDO noted that the amount is related to the year-end closing entry reconciling DIFS R100 vs. R51 and should have been reversed in fiscal year 2023. The SEFA was adjusted to reflect the correct amount of expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the actual vs. budgeted expenditure for the Unemployment Insurance grant.
Effect – DOES is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DOES did not adhere to internal control procedures to reasonably ensure that the SEFA be fairly presented.
Recommendation – We recommend that DOES adhere to internal control procedures to reasonably ensure that expenditures do not exceed budget or grant award amounts.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOES concurs with this finding. The introduction of the new financial system resulted in the creation of several clearing accounts, necessitating ongoing monitoring and adjustments. One such account is the PNG Clearing Account. The specific transaction in question arose from a general ledger adjustment made during the fiscal year 2023 year-end close to reconcile outstanding balances within the PNG clearing account. This adjustment occurred subsequent to the closure of the subledger, prompting corrections at the source and resulting in discrepancies between subledger and general ledger balances.
Management has taken prompt action to address this issue by rectifying discrepancies in the SEFA. Additionally, as part of a agency-wide remediation, we have implemented enhanced controls to facilitate timely reconciliation of subledgers with the general ledger, thus mitigating the risk of future discrepancies. It is important to highlight that this incident is an isolated occurrence within the context of the grant program, stemming from the transition to a new financial system, process changes, and the introduction of subledgers. Importantly, this discrepancy pertains solely to the initial SEFA amount based on general ledger reporting and does not impact federal reporting to the grantor, which is based on subledger data. Furthermore, it does not indicate overspending of federal resources.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-009
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Labor
Unemployment Insurance
ALN: 17.225
Award #: UI-37216-22-55-A-11
Award Year: 10/01/2021 – 12/31/2024 Department of Employment Services (DOES)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 200.510(b), Schedule of Expenditures of Federal awards, states that the auditee must also 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 2 CFR section 200.502, Basis for determining Federal Awards expended.
Condition – During our review of grant carryover analysis in relation to the fiscal year 2023 audit, we noted that DOES recorded $3.3 million of federal administrative expenditures in the current year SEFA in excess of the overall grant award amount for Unemployment Insurance program Award #UI-37216-22-55-A-11. BDO noted that the amount is related to the year-end closing entry reconciling DIFS R100 vs. R51 and should have been reversed in fiscal year 2023. The SEFA was adjusted to reflect the correct amount of expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the actual vs. budgeted expenditure for the Unemployment Insurance grant.
Effect – DOES is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DOES did not adhere to internal control procedures to reasonably ensure that the SEFA be fairly presented.
Recommendation – We recommend that DOES adhere to internal control procedures to reasonably ensure that expenditures do not exceed budget or grant award amounts.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOES concurs with this finding. The introduction of the new financial system resulted in the creation of several clearing accounts, necessitating ongoing monitoring and adjustments. One such account is the PNG Clearing Account. The specific transaction in question arose from a general ledger adjustment made during the fiscal year 2023 year-end close to reconcile outstanding balances within the PNG clearing account. This adjustment occurred subsequent to the closure of the subledger, prompting corrections at the source and resulting in discrepancies between subledger and general ledger balances.
Management has taken prompt action to address this issue by rectifying discrepancies in the SEFA. Additionally, as part of a agency-wide remediation, we have implemented enhanced controls to facilitate timely reconciliation of subledgers with the general ledger, thus mitigating the risk of future discrepancies. It is important to highlight that this incident is an isolated occurrence within the context of the grant program, stemming from the transition to a new financial system, process changes, and the introduction of subledgers. Importantly, this discrepancy pertains solely to the initial SEFA amount based on general ledger reporting and does not impact federal reporting to the grantor, which is based on subledger data. Furthermore, it does not indicate overspending of federal resources.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-010
Prior Year Finding Number: 2022-004
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Emergency Rental Assistance (ERA) Program
ALN: 21.023
Award #: N/A
Award Year: 12/27/2020 – 09/30/2025 Department of Human Services (DHS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Treasury Department ERA FAQ 8-25-21, question 1, states that grantees must require all applications for assistance to include an attestation from the applicant that all information included is correct and complete.
The Treasury Department ERA FAQ 8-25-21, question 4, states that the statutes establishing ERA1 and ERA2 limit eligibility to households based on certain income criteria. For purposes of ERA1, the area median income for a household is the same as the income limits for families published by the Department of Housing and Urban Development (HUD) in accordance with 42 U.S.C. 1437a(b)(2), available under the heading for “Access Individual Income Limits Areas” at https://www.huduser.gov/portal/datasets/il.html. If a grantee in ERA1 uses a household’s monthly income to determine eligibility, the grantee should review the monthly income information provided at the time of application and extrapolate over a 12-month period to determine whether household income exceeds 80 percent of area median income. For example, if the applicant provides income information for two months, the grantee should multiply it by six to determine the annual amount. If a household qualifies based on monthly income, the grantee must redetermine the household income eligibility every three months for the duration of assistance.
Grantees in ERA1 and ERA2 must have a reasonable basis under the circumstances for determining income. A grantee may support its determination with both a written attestation from the applicant as to household income and also documentation available to the applicant, such as paystubs, W-2s or other wage statements, tax filings, bank statements demonstrating regular income, or an attestation from an employer. In appropriate cases, grantees may rely on an attestation from a caseworker or other professional with knowledge of a household’s circumstances to certify that an applicant’s household income qualifies for assistance.
Under categorical eligibility, if an applicant’s household income has been verified to be at or below 80 percent of the area median income (for ERA1) or if an applicant’s household has been verified as a low-income family as defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)) (for ERA2) in connection with another local, state, or federal government assistance program, grantees are permitted to rely on a determination letter from the government agency that verified the applicant’s household income or status as a low-income family, provided that the determination for such program was made on or after January 1, 2020.
The Treasury Department ERA FAQ 8-25-21, question 5, states grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount. If a household does not have a signed lease, documentation of residence may include evidence of paying utilities for the residential unit, an attestation by a landlord who can be identified as the verified owner or management agent of the unit, or other reasonable documentation as determined by the grantee. In the absence of a signed lease, evidence of the amount of a rental payment may include bank statements, check stubs, or other documentation that reasonably establishes a pattern of paying rent, a written attestation by a landlord who can be verified as the legitimate owner or management agent of the unit, or other reasonable documentation as defined by the grantee in its policies and procedures.
Condition – During testing over rental beneficiary eligibility for the Emergency Rental Assistance Program, we noted that the District Department of Human Services, Family Services Agency (FSA) (“the Agency”) was unable to provide sufficient documentation to support the beneficiaries’ determination for rent payments during the fiscal year 2023 audit. Specifically, out of a sample of 60 transactions tested, we noted the following exceptions:
• For four (4) participants, the amount the Agency paid for rental assistance did not agree to the various documentation provided. The total payment not fully supported totaled $7,165, representing known questioned costs.
• For thirteen (13) participants, the Agency did not follow their documented policies and procedures such that the rental calculation worksheets were not provided, or these were not signed by the participants or by the housing support provider.
• For nine (9) participants, there are no evidence of a formal approval of the participant eligibility by the Agency.
The DC Department of Human Services, Family Services Agency, lacks a quality control oversight system to ensure that eligibility documentation is maintained to support eligibility decisions.
Questioned Costs – $7,165
Context – This is a condition identified per review of the Agency’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – The Agency did not appear to adhere to internal control procedures to ensure that applications are properly completed and retained.
Recommendation – We recommend that the Agency strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The Department of Human Services (DHS) agrees that for four (4) participants, the amount the Agency paid for rental assistance did not agree to the various documentation provided. DHS has reviewed these participants’ files and concluded that although these represent gaps in program controls, all four households meet general ERA eligibility criteria. Three (3) participants enrolled in Temporary Assistance for Needy Families (TANF) and/or Supplemental Nutrition Assistance Program (SNAP) and one (1) participant provided income documentation to support that all were well within the 80% AMI and eligible for ERA assistance. In the cases where more subsidy was paid on behalf of households than was documented in the Family Rehousing and Stabilization Program (FRSP) rent calculation worksheet, ERA regulations permitted payment up to full rent and therefore the amounts paid out were eligible under ERA.
DHS agrees with the finding that thirteen (13) participants were missing rental subsidy calculation worksheets or were missing signatures on their rental calculation worksheet and that nine (9) participants were missing formal approval of participant eligibility. These participants were enrolled in the FRSP, also known as Rapid Re-housing (RRH). FRSP is a key program within the District’s continuum of care to support families who are experiencing homelessness or are at imminent risk of experiencing homelessness. The rental calculation worksheet is used to determine the amount an FRSP household contributes towards monthly rent based on household income and makeup. The remaining monthly rent is covered by a subsidy, paid out of ERA funds. In situations where participants were missing the formal approval form or signature, DHS has confirmed that they came from a homeless/imminent risk of homelessness situation through other records such as case notes within Homeless Management Information System (HMIS).
Gaps in documentation were due to rapidly expanding caseloads during the pandemic and new safety protocols that required certain changes to case management protocols. To improve controls, DHS introduced new Standard Operating Procedures (SOPs) for FRSP in fiscal year 2023. The new SOP implements stricter internal control procedures, conducting regular audits, and streamlining the eligibility determination process. The majority of findings were for participants enrolled into FRSP before the new SOPs took effect. DHS will continue execution of the stricter SOPs to ensure there are no documentation gaps moving forward.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-011
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Emergency Rental Assistance (ERA) Program
ALN: 21.023
Award #: N/A
Award Year: 12/27/2020 – 09/30/2025 Department of Human Services (DHS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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.
Condition – Certain grant expenditures amounting to approximately $42.4 million, had erroneously been reflected as expenditures under assistance listing number 21.023, COVID-19 – Emergency Rental Assistance Program. Subsequently, DHS adjusted the SEFA to reflect the actual amount of expenditures incurred for the program.
Questioned Costs – None.
Context – This is a condition identified per review of the DHS’ compliance with the specified requirements.
Effect – DHS is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – DHS did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that DHS adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – The DHS OCFO concurs with the finding. Initially, the expenditures were inadvertently categorized to the incorrect program. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-012
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 - Homeowner Assistance Fund
ALN: 21.026
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Housing and
Community Development (DHCD)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The OMB Compliance Supplement states that Homeowner Assistance Fund participants must establish and adhere to reasonable policies and procedures for evaluating homeowners’ applications in accordance with the HAF Guidance maintained by the U.S. Department of the Treasury. In addition, Homeowner Assistance Fund participants are expected to have policies and procedures to determine homeowner eligibility based on the following criteria: 1) financial hardship, and 2) income determination.
Condition – During our review of DHCD’s internal control over compliance with eligibility requirements, we noted that the agency outsources the eligibility determination process to a third-party administrator to ensure that all applicants meet the necessary criteria. The internal controls at the agency level are limited to validating applications with exceptions and are not robust enough to verify the eligibility of all applications or to confirm the accuracy of the eligibility determinations made by the administrator.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCD’s internal control over compliance with respect to eligibility requirements.
Effect – DHCD did not comply with eligibility requirements of the Homeowner Assistance Fund program.
Cause – DHCD does not have fully effective internal controls over compliance with respect to eligibility requirements.
Recommendation – We recommend that DHCD implement policies and procedures to ensure that key controls exist at the agency to verify all applicants meet eligibility requirements.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-013
Prior Year Finding Number: N/A
Compliance Requirement: Subrecipient Monitoring
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 - Homeowner Assistance Fund
ALN: 21.026
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Housing and
Community Development (DHCD)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Additionally, 2 CFR 200.332 specifies that pass-through entities must 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.
Based upon the pass-through entity's assessment of risk posed by the subrecipient, auditee management determined that onsite reviews of the subrecipient’s program operations were appropriate and designed the following control: DHCD performs desk audits, scheduled site visits and unscheduled site visits during the fiscal year. Reports are prepared at the site visits and properly documented. The reports include deficiencies, recommendations, and proposed corrective action and are reviewed and approved by the Project Managers, Program Managers, and Supervisory Program Managers.
Condition – During our review of four (4) subrecipient samples, we noted the following:
• For two (2) subrecipients, DHCD conducted onsite reviews for the Community Development Block Grants program. However, these reviews did not specifically address the Homeowner Assistance Fund program as required by the guidance and controls outlined.
• For one (1) subrecipient, DHCD conducted a review, but was unable to provide evidence of a finalized report.
• For one (1) subrecipient, DHCD neither performed an onsite review nor a desk audit.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCD’s compliance with the subrecipient monitoring requirements using a statistically valid sample.
Effect – DHCD did not comply with the subrecipient monitoring requirements of the Homeowner Assistance Fund program.
Cause – DHCD does not have fully effective internal controls over compliance with respect to the onsite review process.
Recommendation – We recommend that DHCD strictly adhere to its policies and procedures to ensure that onsite reviews are properly performed and documented for subrecipients.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCD concurs with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-014
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
ALN: 21.027
Award #: N/A
Award Year: 10/01/2021 – 09/20/2023 Department of Behavioral Health (DBH); Department of Energy and Environment (DOEE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Condition – During our tests of the design and implementation of internal controls, we noted the following issues:
DBH did not effectively implement controls over employee premium pay benefits.
• For two (2) out of 60 samples, we identified exceptions to the hours charged to the program. In one instance, there were 24 hours charged to the program on a single day for one employee. In addition, we also noted an instance of charging of hours within the “not worked” code and incorrect hours were charged to the project.
At DOEE, employees charge hours worked each pay period on a time sheet to specific cost centers or combo codes as referred by the agency.
• For one (1) out of 60 samples, we noted that the holiday hours have not been allocated between programs proportionally as required by the District’s policies, as such, incorrect hours were charged to the projects.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Coronavirus State and Local Fiscal Recovery Funds program in fiscal year 2023 were $40,106,238.
Effect – Without internal controls operating as designed, the CSLFRF program was unable to demonstrate that the payroll expenditures charged to the program accurately reflected the costs incurred for the program.
Cause – The CSLFRF program did not follow its own internal control policies, procedures and controls to ensure that payroll costs recorded are properly reviewed and approved.
Recommendation – We recommend that the CSLFRF program fully implement its plan to deploy policies and procedures to ensure that payroll costs are recorded accurately.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH and DOEE concur with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-015
Prior Year Finding Number: N/A
Compliance Requirement: Subrecipient Monitoring
Program: Government Department/Agency:
U.S. Department of the Treasury
COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
ALN: 21.027
Award #: N/A
Award Year: 10/01/2021 – 09/20/2023 Department of Energy and Environment (DOEE); Office of Neighborhood Safety and Engagement (ONSE); Various Other District Agencies
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with the Uniform Guidance in 2 CFR Section 200.331(a) Requirements for Pass-Through Entities requires that pass-through entities must: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – The program’s documented subrecipient monitoring requirements includes risk assessments, monitoring of subrecipients and the submission and review of monthly financial and performance reports.
During our testing of the subrecipient’s compliance requirements, we noted the following issues:
• Our examination of the program’s subrecipient monitoring requirements includes submission and review of monthly financial and performance reports. We noted for one (1) out of 41 samples, the subrecipient failed to submit their monthly financial and performance reports.
• For one (1) out of 41 samples the agency had no evidence to support it had performed the mandatory follow up on reported audit findings in the subrecipient’s audit report for the Corrective Action taken by the subrecipient to remediate the finding.
In addition, grant expenditures totaling approximately $1.9 million were erroneously excluded as subrecipient expenditures on the Schedule of Federal Awards under assistance listing number 21.027, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The District subsequently adjusted the SEFA to reflect the correct amount of subrecipient expenditures incurred for the program.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the agencies’ compliance with specified monitoring requirements on the program’s subrecipients using a statistically valid sample.
Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved.
Also, the District is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance. In addition, the District did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that the agencies maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients, and to adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOEE, ONSE and various other District agencies agree with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-016
Prior Year Finding Number: 2022-007
Compliance Requirement: Equipment and Real Property Management
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 District of Columbia Public Schools (DCPS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Also, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)).
Condition – We noted that there is no formally documented physical count for equipment purchased using federal funds in 2023.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DCPS’ compliance with the specified requirements using a statistically valid sample.
Effect – There is a risk that a lack of physical count could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received.
Cause – Due to a lack of formal process and policy regarding physical count, DCPS was unable to adequately support compliance with its policies and procedures regarding monitoring of equipment acquired with Federal funds.
Recommendation – We recommend that DCPS implement policies, procedures and controls that will ensure that equipment counts are conducted, that evidence of a count is formally documented and an authorized individual formally approves the result of the count and the related reconciliation to equipment records, in order to adhere to Federal regulations related to equipment and its related maintenance.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DCPS agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-017
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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.
Condition – Certain grant expenditures amounting to approximately $9.7 million, had erroneously been reflected as expenditures under assistance listing number 84.425D, Elementary and Secondary School Emergency Relief (ESSER) Fund. Subsequently, OSSE adjusted the SEFA to reflect the expenditure to 84.425U, American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund. Further, the amount of subrecipient expenses initially reported is overstated by $269,140. Subsequently, OSSE adjusted the SEFA to reflect the actual amount of subrecipient expenditures incurred for the program.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with the specified requirements.
Effect – OSSE is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – OSSE did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that OSSE adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-016
Prior Year Finding Number: 2022-007
Compliance Requirement: Equipment and Real Property Management
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 District of Columbia Public Schools (DCPS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Also, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)).
Condition – We noted that there is no formally documented physical count for equipment purchased using federal funds in 2023.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DCPS’ compliance with the specified requirements using a statistically valid sample.
Effect – There is a risk that a lack of physical count could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received.
Cause – Due to a lack of formal process and policy regarding physical count, DCPS was unable to adequately support compliance with its policies and procedures regarding monitoring of equipment acquired with Federal funds.
Recommendation – We recommend that DCPS implement policies, procedures and controls that will ensure that equipment counts are conducted, that evidence of a count is formally documented and an authorized individual formally approves the result of the count and the related reconciliation to equipment records, in order to adhere to Federal regulations related to equipment and its related maintenance.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DCPS agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-017
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 – 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan - Elementary and Secondary Schools
Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034-21A
Award Year: 03/24/2021 – 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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.
Condition – Certain grant expenditures amounting to approximately $9.7 million, had erroneously been reflected as expenditures under assistance listing number 84.425D, Elementary and Secondary School Emergency Relief (ESSER) Fund. Subsequently, OSSE adjusted the SEFA to reflect the expenditure to 84.425U, American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund. Further, the amount of subrecipient expenses initially reported is overstated by $269,140. Subsequently, OSSE adjusted the SEFA to reflect the actual amount of subrecipient expenditures incurred for the program.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with the specified requirements.
Effect – OSSE is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – OSSE did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA.
Recommendation – We recommend that OSSE adhere to instituted policies and procedures to ensure the accuracy of the SEFA.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-018
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Education
COVID-19 – Education Stabilization Fund
Elementary and Secondary School Emergency Relief (ESSER) Fund
ALN: 84.425D
Award #: S425D210034
Award Year: 05/07/2020 - 09/30/2023
COVID-19 – Education Stabilization Fund
Emergency Assistance for Non-Public Schools
ALN: 84.425R
Award #: S425R210015
Award Year: 02/08/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER)
ALN: 84.425U
Award #: S425U210034 - 21A
Award Year: 03/24/2021 - 09/30/2023
COVID-19 – Education Stabilization Fund
American Rescue Plan – Emergency Assistance to Non-Public Schools
ALN: 84.425V
Award #: S425V210015
Award Year: 09/24/2021 - 09/30/2024
COVID-19 – Education Stabilization Fund
American Rescue Plan Elementary and Secondary Schools Emergency Relief Fund – Homeless Children and Youth (ARP-HCY)
ALN: 84.425W
Award #: S425W210009
Award Year: 04/23/2021 - 09/30/2023 Office of the State Superintendent of Education (OSSE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System.
In accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – Management represented that there are no required FFATA filings during fiscal year 2023 since all subawards were granted in 2022 and prior. However, OSSE was not able to provide supporting documentation for eight (8) subawards with expenses during the fiscal year 2023 that would allow us to verify that the subawards were granted prior to fiscal year 2023.
Questioned Costs – None.
Context – This is a condition identified per review of OSSE’s compliance with reporting requirements.
Effect – OSSE is not in compliance with reporting requirements as it failed to provide evidence of identifying and reporting FFATA reporting requirements.
Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirement.
Recommendation – We recommend that OSSE implement policies, procedures and controls that will ensure compliance with all the required laws, guidelines and requirement under the award.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-019
Prior Year Finding Number: 2022-010
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.430 Compensation – Personal Services:
“Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.”
2 CFR Section 200.430(i):
“Standards for Documentation of Personnel Expenses (1) 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) [Reserved]
(vii) 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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.”
Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.”
Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must:
1. Submit a request in advance to use annual leave to their manager or supervisor.
2. Receive approval from the manager or supervisor; and
3. Record the approved leave taken on their timesheet in PeopleSoft.
Condition – During our testwork for Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll), we noted:
• For seventeen (17) out of a sample of 40 employees tested, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation that the annual leave or overtime hours worked by the employee during the selected payperiods were preapproved.
• For one (1) out of a sample of 40 employees tested, DHS/ESA was unable to provide an explanation of the identified variance between the salary earned and the amount included on the paystub.
• For one (1) out of a sample of 40 employees tested, DHS/ESA was unable to provide an explanation and support for the benefit refund taxable included on the paystub and the variance between the hours on the timesheet and on the pay stub.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the TANF program in fiscal year 2023 were $15,577,889.
Effect – DHS/ESA was unable to demonstrate that annual leave or overtime hours charged to the federal program was approved in advance in accordance with the internal policies and procedures of the agency. In addition, without adequate internal controls in place to ensure that documentation that supports the costs are properly maintained, costs could be charged that are not properly approved.
Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that authorization forms evidencing the preapproval of annual leave or overtime hours are obtained and maintained as well as support of salary and benefits earned.
Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of annual leave or overtime hours is obtained and maintained. In addition, we recommend that the agency strengthen their policies and procedures to ensure that transactions are properly supported.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-020
Prior Year Finding Number: 2022-011
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
For TANF, per 45 CFR Section 205.60 (a), “The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under Section 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance.”
Condition – During our testing over beneficiary eligibility compliance requirements of the Temporary Assistance for Needy Families (TANF) program, we selected a sample of 60 beneficiaries in fiscal year 2023 to test DHS’ compliance with TANF eligibility requirements. We noted the following:
• For five (5) out of 60, DHS was unable to provide support that would allow us to test that cash assistance was not provided to an individual during the 10-year period that began on the date the individual was convicted in Federal or State court of having made a fraudulent statement or representation with respect to place of residence. In addition, for these five (5) samples, DHS was unable to provide support that would allow us to test that assistance was not provided to any individual who was fleeing to avoid prosecution, or custody or confinement after conviction, for a felony or attempt to commit a felony, or who is violating a condition of probation or parole imposed under Federal or State law.
The questioned costs for the above issues amounted to $22,279, which represents 7.75% of the total eligibility amounts tested related to the 60 sampled items of $287,436.
Questioned Costs – Known amount is $22,279.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without properly maintaining documentation to support eligibility determinations, ineligible beneficiaries may receive benefits under the TANF grant and DHS may make payments on behalf of those beneficiaries resulting in noncompliance with the eligibility requirements.
Cause – DHS did not consistently adhere to its established policies and procedures requiring it to maintain documentation supporting participant eligibility.
Recommendation - We recommend that DHS strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS/ESA concur with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-021
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
According to Title IV-A, Section 411 of the Social Security Act (the Act), 45 CFR 265.3, and the American Recovery and Reinvestment Act (ARRA) of 2009, (Public Law 111-5), each State must file an annual report containing information on the TANF program and the State’s maintenance-of-effort (MOE) program(s) for that year, including strategies to implement the Family Violence Option, State diversion programs, and other program characteristics. States are required to submit the ACF-196R report quarterly, beginning in Federal Fiscal Year (FFY) 2015, in lieu of the SF-425, Federal Financial Report (financial status). Each State files quarterly expenditure data on the State’s use of Federal TANF funds, State TANF MOE expenditures, and State expenditures of MOE funds in separate State programs. If a State is expending Federal TANF funds received in prior fiscal years, it must file a separate quarterly TANF Financial Report for each fiscal year that provides information on the expenditures of that year’s TANF funds. This form must be used for reporting regular TANF grant funds, Contingency Funds, and ARRA-Emergency Fund for TANF State Programs funds. See TANF-ACF-PI-2014-02, available at http://www.acf.hhs.gov/programs/ofa/resource/tanf-acf-pi-2014-02, for more information.
For the ACF-204 report (Special Reporting), according to 45 CFR 265.9, 45 CFR 265.10, 45 CFR 263, Subpart A, and TANF-ACF-PI-01-06 dated October 24, 2001, Each State must file an annual report containing information on the TANF program and the State’s maintenance-of-effort (MOE) program(s) for that year, including strategies to implement the Family Violence Option, State diversion programs, and other program characteristics. Each State must complete the Annual Report including the Annual Report on State Maintenance-of-Effort Programs (ACF-204) for each program for which the State has claimed basic MOE expenditures for the fiscal year. States may submit this report as a freestanding report or as an addendum to the fourth quarter TANF Data Report. The total MOE expenditures reported in item 5 of the ACF-204 should equal the total MOE expenditures reported in line 24, columns (B) plus (C) of the 4th quarter ACF-196R TANF Financial Report; or line 17, column (B) of the ACF-196-TR, Territorial Financial Report.
For the ACF-196P (Special Reporting), on March 11, 2021, the President signed the American Rescue Plan Act of 2021, now known as Public Law 117-2, into law establishing the Pandemic Emergency Assistance Fund (PEAF) in section 403(c) of the Social Security Act. 42 U.S.C. § 603(c). PEAF provided $1 billion in funding to states, tribes, and five U.S. territories to assist families impacted by the Coronavirus Disease 2019 by providing non-recurrent, short-term benefits. PEAF provided states and tribes until September 30, 2022, to spend an initial allotment of funds. 42 U.S.C. § 603(c)(6)(D)(i). Any unused funds were to be reallotted among the states or tribes that had used all their funds. 42 U.S.C. § 603(c)(4)(B). Effective FFY 2021, all grantees administering the TANF PEAF grant must complete reporting in accordance with these ACF-196P instructions. As well, state, territory and tribal lead agencies must complete and submit this report (or 477 narrative report) in accordance with the terms and conditions of the TANF PEAF grant authorized by the American Rescue Plan Act of 2021. Expenditures (for lines 2 through 4) on the ACF-196P mean the payments made with Pandemic Emergency Assistance Fund dollars. A grantee must not include obligations not yet paid (i.e., unliquidated funds) on these line items.
Condition – We noted the following:
• During our test work over the quarterly ACF-196R report, we noted that for Grant Identifying number - G-2301DCTANF the 4th quarter report was not adequately reviewed. Specifically, we noted that the report reflected that DHS had Maintenance of Effort (MOE) expenditures of $304,608,961. However, based on the supporting documentation provided, the expenditures should have been $304,558,961 thus overstating the report by $50,000. In addition, we noted that there was a variance of ($9,589,251) between the amount included in the SEFA detail including Indirect Costs ($67,483,475) and the cumulative amount reported on the ACF-196R for the fiscal year 2023 grant for the sum of federal and contingency funds ($77,072,726). DHS was unable to provide support for the variance.
• During our test work over the Matching, Level of Effort, Earmarking compliance requirement, we noted that although the Cumulative Administrative Costs reported on ACF-196R for the G-2301DCTANF ($9,736,237) did not exceed the Maximum Allowed for the G-2301DCTANF grant (15% of $88,381,274 which equals $13,257,191), the amount reported as Cumulative Administrative Costs on ACF-196R for the period October 1, 2022 to September 30, 2023 did not agree with the amounts included in the supporting documentation ($16,805,114).
• During our test work over the annual ACF-204 report, we noted the report was not adequately reviewed. Specifically, we noted that the report reflected that DHS had MOE expenditures of $287,422,679. However, based on the supporting documentation provided, the expenditures should have been $304,558,961 thus understating the report by $17,136,282.
• During our test work over the annual ACF-196P report, we noted the report was not adequately reviewed. Specifically, we noted that the report reflected that DHS had PEAF expenditures of $1,446,322. However, based on the supporting documentation provided, the expenditures should have been $1,360,500, thus overstating the report by $85,822.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without proper internal controls and policies and procedures in place to ensure that correct amounts were reported and were properly reviewed, the TANF program:
• Incorrectly reported MOE expenditures on the ACF-204 report which resulted in an understatement of $17,136,282,
• Incorrectly reported MOE expenditures on the ACF-196R report which resulted in an overstatement of $50,000, and
• Incorrectly reported PEAF expenditures on the ACF-196P report which resulted in an overstatement of $85,822.
Cause – Management did not have proper internal controls and policies and procedures in place to ensure that the amounts on the ACF-196R, ACF-204 and the ACF-196P were properly reported and the reports were properly reviewed and approved.
Recommendation - We recommend that DHS implement policies, procedures and controls that will enable an accurate reconciliation between the data sources used in the preparation of the ACF-196R, ACF-196P and ACF-204 reports to ensure proper reporting of the MOE amounts and PEAF expenditures. In addition, DHS management should establish controls over the preparation of the ACF-204 to ensure that the report is reviewed by DHS personnel prior to the report being certified and submitted by program personnel.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-022
Prior Year Finding Number: 2022-012
Compliance Requirement: Reporting;
Special Tests and Provisions – Penalty for Failure to Comply With Work Verification Plan
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 45 CFR Section 261.60 (a), “A State must report the actual hours that an individual participates in an activity, subject to the qualifications in paragraphs (b) and (c) of this section and Section 261.61(c). It is not sufficient to report the hours an individual is scheduled to participate in an activity. (b) For the purposes of calculating the work participation rates for a month, actual hours may include the hours for which an individual was paid, including paid holidays and sick leave. For participation in unpaid work activities, it may include excused absences for hours missed due to a maximum of 10 holidays in the preceding 12-month period and up to 80 hours of additional excused absences in the preceding 12-month period, no more than 16 of which may occur in a month, for each work-eligible individual. Each State must designate the days that it wishes to count as holidays for those in unpaid activities in its Work Verification Plan. It may designate no more than 10 such days. In order to count an excused absence as actual hours of participation, the individual must have been scheduled to participate in a countable work activity for the period of the absence that the State reports as participation. A State must describe its excused absence policies and definitions as part of its Work Verification Plan, specified at Section 261.62. (c) For unsubsidized employment, subsidized employment, and OJT, a State may report projected actual hours of employment participation for up to six months based on current, documented actual hours of work. Any time a State receives information that the client's actual hours of work have changed, or no later than the end of any six-month period, the State must re-verify the client's current actual average hours of work, and may report these projected actual hours of participation for another six-month period. (d) A State may not count more hours toward the participation rate for a self-employed individual than the number derived by dividing the individual's self-employment income (gross income less business expenses) by the Federal minimum wage. A State may propose an alternative method of determining self-employment hours as part of its Work Verification Plan. (e) A State may count supervised homework time and up to one hour of unsupervised homework time for each hour of class time. Total homework time counted for participation cannot exceed the hours required or advised by a particular educational program.”
Per 45 CFR Section 261.61 (a), “A State must support each individual’s hours of participation with documentation in the case file. In accordance with Section 261.62, a State must describe in its Work Verification Plan the documentation it uses to verify hours of participation in each activity.”
According to the DC State Verification Plan, the D.C. Department of Human Services (DHS), Department of Human Services Monitoring Unit reviews and audits all documentation submitted by vendors reflecting the activities of recipients in TANF Employment program. This documentation includes time sheets, activity logs, school records, pay stubs, and verification of employment, work experience and on-the-job training. The Monitoring Unit completes this audit process to determine if sufficient documentation exists to substantiate reported time and attendance data, to warrant a payment to TANF Employment program vendors, and submission of countable hours for federal reporting purposes. The District projects hours of participation in unsubsidized, self-employment for six months or until the recipient's next scheduled recertification, whichever is sooner.
Per 45 CFR Section 265.7 (a)-(c), “Each State’s quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), and the SSP-MOE Data Report) must be complete and accurate and filed by the due date.”
For disaggregated data report, ‘a complete and accurate report’ means that:
(1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems, and include correction of the quarterly data by the end of the fiscal year reporting period;
(2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3) The State reports data for all required elements (i.e., no data are missing);
(4)(i) The State provides data on all families; or (ii) if the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and
(5) Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates.
For an aggregated data report, “a complete and accurate report” means that:
(1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems;
(2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3) The State reports data on all applicable elements; and
(4) Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts).”
45 CFR Section 265.7 (f) states that “States must maintain records to adequately support any report, in accordance with Section 75.361 through 75.370 of this title.”
Condition – During our test work over a sample of 60 participants for Special Tests and Provisions - Penalty for Failure to Comply with Work Verification Plan and Reporting, we noted:
• For nine (9) instances, we noted that although the hours reported on the ACF-199 report met or exceeded the required hours, the hours reported did not agree with the projected hours per the support provided.
• For nine (9) instances, we noted that although the hours reported on the ACF-199 report met or exceeded the required hours, DHS/ESA was unable to provide support for the hours reported on the ACF-199 report.
• For two (2) instances, we noted that although the hours on the support provided met or exceeded the required hours, the hours reported in the ACF-199 report do not agree with the average hours in CATCH or the support provided.
• For two (2) instances, we noted that the support provided was for more than six months before the sample month. Therefore, the hours were not properly supported.
• For one (1) instance, although the hours on the support provided met or exceeded the required hours, the hours reported in the ACF-199 report do not agree with the average hours in CATCH. Therefore, the support does not agree with the hours reported. In addition, we noted that although the Work Number documentation indicated that the customer was fully engaged (at least 30 hours per payperiod) for at least three months during fiscal year 2023 and the customer was required to work 20 hours per week, DHS/ESA did not lift the Work Requirement Noncompliance sanction that has been imposed since 5/1/2016.
• For one (1) instance, although the hours on the support provided met or exceeded the required hours, and the hours reported in the ACF-199 report agree with the average hours reported in CATCH, the hours entered in CATCH should initially have been denied by OPM and then re-entered by provider because the hours were entered incorrectly.
The information tested in our sample represents the underlying data used in Reporting for the 1st and 4th quarters of fiscal year 2023. Consequently, DHS incorrectly reported data in the ACF-199 report for the 1st and 4th quarters of fiscal year 2023.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Data within the ACF-199 report may not be complete and accurate. Specifically, if the work participation data is not substantiated, or inconsistencies are noted, it may result in inaccurate data being reported and may lead to an incorrect ACF-199 report and could result in an incorrect allocation of Federal Funds to the state.
Cause – Controls are not operating effectively over the documentation of work participation data to ensure that adequate evidence of the work participation is maintained.
Recommendation - We recommend that DHS enforce existing policies and procedures and implement additional controls to ensure that adequate documentation is maintained to substantiate the work participation data reported in the ACF-199 report in accordance with the District of Columbia Work Verification Plan.
We also recommend that DHS implement policies, procedures and controls that will enable an accurate reconciliation between the data sources used in the preparation of the ACF-199 report to ensure proper reporting of data elements.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the findings. ESA agrees with the documentation issue, which is compounded by the lack of interface between the reporting data systems. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-023
Prior Year Finding Number: 2022-013
Compliance Requirement: Special Tests and Provisions – Income Eligibility and Verification System
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/
Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 45 CFR Section 205.56(a)(1)(i), “The State agency shall review and compare the information obtained from each data exchange against information contained in the case record to determine whether it affects the applicant’s or the recipient’s eligibility or the amount of assistance.”
Per 45 CFR Section 205.60 (a), “The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under Section 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance.”
For the Pandemic Emergency Assistance Fund (PEAF), per TANF-ACF-IM-2022-01 (Guidance for Use of the Pandemic Emergency Assistance Fund Appropriated in the American Rescue Plan (ARP) Act of 2021 (Pub. L. 117-2); Accompaniment to ACF-IOAS-DCL-22-01) “We remind grantees that the Income Eligibility Verification System (IEVS) does apply to the PEAF, as it is funded under Title IV-A; however, tribes are not subject to the IEVS requirements.”
Condition – During our test work of 60 cases selected to test the Special Tests and Provisions – Income Eligibility and Verification System (IEVS) for TANF, we noted that DHS was unable to provide sufficient documentation to support all eligibility determinations tested during the fiscal year 2023 audit. Specifically, out of the 60 beneficiary disbursements tested, we noted the following exceptions:
• For one (1) out of 60, although Outbound and Inbound activity was provided showing that the agency used IEVS, the Outbound and Inbound activity occurred months after the payment selected. Therefore DHS/ESA was unable to provide evidence of use of IEVS to determine eligibility.
• For one (1) out of 60, although Outbound and Inbound activity was provided, the Inbound activity occurred years before the payment selected. Therefore DHS/ESA was unable to provide evidence of use of IEVS to determine eligibility.
In addition, during our test work of 60 cases selected to test the Special Tests and Provisions – Income Eligibility and Verification System (IEVS) for PEAF, we noted that DHS was unable to provide sufficient documentation to support all eligibility determinations tested during the fiscal year 2023 audit. The sample size consisted of 55 of the TANF Eligibility sample customers that received PEAF and 5 additional sample customers that received PEAF. We noted the following for the additional 5 samples tested for PEAF:
• For three (3) out of 5, DHS/ESA was unable to provide evidence of use of IEVS to determine eligibility.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – The District is not in full compliance with its policies and with Federal program compliance requirements surrounding records maintenance. Further, ineligible TANF beneficiaries may receive benefits under the TANF grant and the District may make payments on behalf of those beneficiaries.
Cause – Controls are not adequate to ensure that the District adheres to its established policies and procedures requiring it to maintain documentation supporting participant eligibility.
Recommendation - We recommend that DHS enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring case record documentation to ensure that Income Eligibility and Verification System requirements are complied with.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the finding in this report. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-024
Prior Year Finding Number: N/A
Compliance Requirement: Special Tests and Provisions – Lack of Child Care for Single Custodial Parent of Child Under Age Six
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Temporary Assistance for Needy Families (TANF)
ALN: 93.558
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/
Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 45 CFR Section 261.15 “Can a family be penalized if a parent refuses to work because he or she cannot find child care? (a) No, the State may not reduce or terminate assistance based on an individual’s refusal to engage in required work if the individual is a single custodial parent caring for a child under age six who has a demonstrated inability to obtain needed child care, as specified at §261.56.”
Per 45 CFR Section 261.16 “Does the imposition of a penalty affect an individual’s work requirement?
A penalty imposed by a State against the family of an individual by reason of the failure of the individual to comply with a requirement under TANF shall not be construed to be a reduction in any wage paid to the individual.”
Per 45 CFR Section 261.56 “What happens if a parent cannot obtain needed child care? (a)(1) If the individual is a single custodial parent caring for a child under age six, the State may not reduce or terminate assistance based on the parent's refusal to engage in required work if he or she demonstrates an inability to obtain needed child care for one or more of the following reasons: (i) Appropriate child care within a reasonable distance from the home or work site is unavailable; (ii) Informal child care by a relative or under other arrangements is unavailable or unsuitable; or (iii) Appropriate and affordable formal child care arrangements are unavailable. (2) Refusal to work when an acceptable form of child care is available is not protected from sanctioning.
Per 45 CFR Section 261.57 What happens if a State sanctions a single parent of a child under six who cannot get needed child care? (a) If we determine that a State has not complied with the requirements of §261.56, we will reduce the SFAG payable to the State by no more than five percent for the immediately succeeding fiscal year unless the State demonstrates to our satisfaction that it had reasonable cause or it achieves compliance under a corrective compliance plan pursuant to §§262.5 and 262.6 of this chapter. (b) We will impose the maximum penalty if: (1) The State does not have a statewide process in place to inform parents about the exception to the work requirement and enable them to demonstrate that they have been unable to obtain child care; or (2) There is a pattern of substantiated complaints from parents or organizations verifying that a State has reduced or terminated assistance in violation of this requirement. (c) We may impose a reduced penalty if the State demonstrates that the violations were isolated or that they affected a minimal number of families.
Condition – During our test work over a sample of twenty (20) out of a population of 194 childcare cases reviewed by supervisors and included on two quarterly reports submitted to the DC Office of the State Superintendent of Education (OSSE), for Special Tests and Provisions - Lack of Child Care for Single Custodial Parent of Child Under Age Six, we noted for one child care case reviewed, the Supervisory Case Record Review form was not signed or dated by the supervisor.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample.
Effect – Without following the internal controls and policies and procedures already in place to ensure that eligibility for child care is being properly determined by staff, it may result in inaccurate decisions for child care cases or inaccurate information being reported to OSSE.
Cause – Controls are not operating effectively over the documentation of the supervisory review of child care cases before submission of the quarterly report to OSSE.
Recommendation - We recommend that DHS/ESA enforce existing policies and procedures and implement additional controls to ensure that all Supervisory Case Record Review forms are properly signed and dated by the supervisor before the report is submitted to OSSE.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the finding noting that appropriate actions were taken to approve the case, however, the reviewing supervisor failed to sign the document after conducting the supervisory audit. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-025
Prior Year Finding Number: 2022-014
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Low Income Home Energy Assistance Program
ALN: 93.568
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Energy and Environment (DOEE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The OMB Compliance Supplement states that “Grant recipients may provide assistance to (a) households in which one or more individuals are receiving Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) benefits, or certain needs-tested veterans’ benefits; or (b) households with incomes which do not exceed the greater of 150 percent of the state’s established poverty level, or 60 percent of the state median income. Grantees may establish lower income eligibility criteria, but no household may be excluded solely on the basis of income if the household income is less than 110 percent of the state’s poverty level (42 USC 8624(b)(2)). Grantees must give priority to those households with the highest home energy costs or needs in relation to income and household size (42 USC 8624(b)(5)).”
Per 42 U.S. Code Section 8624(b)(2):
“The chief executive officer of each State shall certify that the State agrees to make payments under this subchapter only with respect to:
(A) Households in which 1 or more individuals are receiving:
(i) Assistance under the State program foundered under part A of the title IV of the Social Security Act;
(ii) supplemental security income payments under title XVI of the Social Security Act;
(iii) supplemental nutrition assistance program benefits under the Food and Nutrition Act of 2008; or
(iv) payments under section 1315, 1521, 1541, or 1542 of title 38, or under section 306 of the Veterans’ and Survivors’ Pension Improvement Act of 1978; or
(B) Households with incomes which do not exceed the greater of:
(i) An amount equal to 150 percent of the poverty level for such State; or
(ii) An amount equal to 60 percent of the State median income.”
Condition – During our review of 60 eligibility samples, we noted the following exceptions:
• DOEE is not performing review of all individual's application. DOEE's policy is to perform secondary reviews of a minimum of 25% of all applications each fiscal year, however, there is no documentation how these policies and procedures were implemented and how they are covering 25% minimum of the population.
• The total population initially provided did not reconcile to SEFA.
• For 1 sample selected, DOEE was not able to provide sufficient supports to verify that the address mentioned on the beneficiary letter and the gas bill belongs to the same person.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DOEE’s compliance with specified requirements for eligibility using a statistically valid sample.
Effect – Without proper review, inaccurate benefit amount or ineligible participant may receive benefits even if not eligible. Also, the total eligibility population may not be complete.
Cause – It appears that DOEE’s internal controls were not operating effectively over the eligibility household income population.
Recommendation – We recommend that DOEE strengthen their existing policies and procedures to ensure the review of the initial application household information including household incomes, household sizes, etc. are correctly recorded into the system based on supporting documentation. In addition, proper supporting documentation should be put in place to document the department’s control over review of applicant’s benefit application. Further, DOEE should review the eligibility population and reconcile to SEFA.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOEE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-026
Prior Year Finding Number: 2022-015
Compliance Requirement: Matching, Level of Effort, Earmarking
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Low Income Home Energy Assistance Program
ALN: 93.568
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Energy and Environment (DOEE)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Compliance Supplement on earmarking requirement,
a) Planning and Administrative Costs, (1) No more than 10 percent of a state’s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)).
b) Weatherization – No more than 15 percent of the greater of the funds allotted or the funds available to the grant recipient for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grant recipient may then obligate and spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)).
c) Energy Need Reduction Services – No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)).
Condition – During our review of two (2) samples, although DOEE met the earmarking requirement, there was no evidence of review was performed.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DOEE’s compliance with specified requirements for earmarking calculations.
Effect – Without proper internal controls and policies and procedures in place to monitor and review, DOEE was not in compliance with the earmarking requirements.
Cause – DOEE does not have adequate controls in place to ensure that earmarking requirements are being properly calculated and reviewed and the required documentation is not being maintained to evidence compliance with the requirements.
Recommendation – We recommend that DOEE strengthen their existing policies and procedures to ensure the review of the earmarking calculations are performed. Further, proper supporting documentation should be put in place to document the department’s control over review of such calculations.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DOEE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-027
Prior Year Finding Number: 2022-016
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Foster Care – Title IV-E
ALN: 93.658
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Based on CFSA’s Human Resources Administration Issuance: HR-06-1 dated May 12, 2006, staff must seek and receive advance written approval prior to working overtime. It also indicates that in emergency situations requiring an immediate response, the employee shall make every reasonable attempt to obtain advance approval by an appropriate manager or supervisor.
CFSA uses a Random Moment Study (RMS) to allocate the administrative costs to the Foster Care program. The study entails selecting a sample of social workers on a quarterly basis to participate in the RMS study where the social workers are required to notate what they were doing at the sample moment. Subsequently, the supervisors of these social workers review and validate their responses. validation of the responses adds an extra layer of reliability to the data collected. It ensures that the information provided by social workers is accurate and reflective of their actual activities. This validation process helps maintain the integrity of the study and ensures that the results are trustworthy in making decisions when determining the RMS percentage utilization in the allocation of the administrative costs.
Condition – During our review of the payroll process regarding the review and approval of time and attendance, we noted the following in our sample of 60 items:
• For three (3) out of the sample, CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime are maintained.
• For five (5) out of the sample, validation of the Random Moment Study was not performed.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample.
Effect – Without proper internal controls and policies and procedures in place to ensure maintenance of records increase the risk of disagreements between employer and employee regarding the employee’s correct payment. Additionally, the failure to validate the RMS could lead to inaccurate results, impacting the study’s effectiveness in allocating administrative costs.
Cause – CFSA did not have proper internal controls and policies and procedures in place to ensure that authorization forms evidencing the preapproval of overtime are maintained. Additionally, CFSA did not follow its internal controls, policies and procedures to ensure the accuracy and consistent documentation of the RMS validation.
Recommendation - We recommend that CFSA strengthen its policies, procedures, and controls to ensure that pre-authorization of overtime is maintained. Furthermore, we recommend that CFSA enhance its procedures to ensure the verification process is performed and maintained and the supervisors maintain consistent documentation of the RMS validation.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the finding. The issues related to pre-approval of overtime for the three employees in question pertained to pay periods that pre-dated CFSA’s corrective action on this same issue that resulted from the fiscal year 2022 Single Audit. Corrective action on this issue, therefore, has already been taken. With respect to the RMS, the Agency notes that while supervisory social worker validation response rates must improve, CFSA’s contracted cost allocation partner performs a 100% quality assurance review of each and every response to verify internal consistency and accuracy.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-028
Prior Year Finding Number: 2022-017
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Foster Care – Title IV-E
ALN: 93.658
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
45 CFR Section 92.20(b)(2), “Accounting records, "Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.”
45 CFR Section 1356.30(a) states, “The Title IV-E agency must provide documentation that criminal records checks have been conducted with respect to prospective foster and adoptive parents.”
42 U.S. Code Section 671(a)(20)(A), “In order for a State to be eligible for payments under this part, it shall have a plan approved by the Secretary which provides procedures for criminal records checks of national crime information databases for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child regardless of whether foster care maintenance payments or adoption assistance payments are to be made on behalf of the child under the State plan.”
Furthermore, per 45 CFR Section 1356.21(a), “Statutory and regulatory requirements of the Federal foster care program, To implement the foster care maintenance payments program provisions of the title IV-E plan and to be eligible to receive Federal financial participation (FFP) for foster care maintenance payments under this part, a Title IV-E agency must meet the requirements of this section, 45 CFR 1356.22, 45 CFR 1356.30, and Parts 472, 475(1), 475(4), 475(5), 475(6).”
Condition – During our audit we noted that in fiscal year 2023, the Foster Care program had total disbursements of $2,825,300 for 3,438 maintenance payments. We selected a sample of 60 participants representing disbursed federal funds totaling $48,217, we noted the following deficiencies:
• For two (2) of 60 samples, CFSA was unable to provide valid providers licenses for verification.
• For twenty-three (23) of 60 samples, CFSA did not provide complete evidence of the household composition; therefore, we were unable to determine whether background checks such as criminal record checks and fingerprint-based checks from the national crime information databases was performed for each member residing the home.
These deficiencies represent 43% of the total disbursements tested.
Questioned Costs – Known amount is $20,856.
Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample.
Effect – CFSA was not in compliance with the eligibility requirements of the Foster Care program.
Cause – CFSA does not have adequate controls in place to ensure that the required eligibility documentation is maintained to evidence compliance with eligibility requirements.
Recommendation - We recommend CFSA reevaluate and strengthen its existing policies and procedures over the review and maintenance of appropriate documentation to ensure compliance with eligibility requirements in accordance with the program.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with the findings pertaining to the two licensing issues. In both instances, the foster care providers in question had indeed met all applicable licensing requirements and were licensed in the FACES.net interim Comprehensive Child Welfare Information System (CCWIS), but the certificates themselves were not issued.
Regarding the issue related to household composition, CFSA concurs with the finding. The finding is in reference to other adults residing in the foster home and not the licensed foster parents themselves. The District’s local licensing regulations require that CFSA conduct criminal background checks of other adults in the home during initial licensure of foster parents and then during each re-licensure cycle. CFSA provided background check documentation for other adults in homes in which they were applicable, but the household composition checklists, which delineate “other adults” residing in the home, were in some cases incomplete or unsigned by the licensing worker.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-029
Prior Year Finding Number: N/A
Compliance Requirement: Special Tests and Provisions – Payment Rate Setting and Application
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Foster Care – Title IV-E
ALN: 93.658
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Child and Family Services Agency (CFSA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per CFSA’s policies and procedures, providers must submit quarterly reports within 45 days of the end of each Federal fiscal year quarter. Upon receipt of quarterly reports from the provider, the Business Services Administration Program Manager reviews each Expenditure Detail Spreadsheet for compliance, accuracy and reasonableness.
Condition – Our assessment of the special tests and provisions requirement, revealed that while the selected providers’ quarterly reports displayed no deficiencies, CFSA was unable to provide documentation evidencing the review and approval of the quarterly reports for all 40 transactions that were tested.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of CFSA’s compliance with specified requirements using a statistically valid sample.
Effect – The absence of documentation specifying who reviews and approves the quarterly reports compromises accountability and creates ambiguity in identifying the responsible parties in instances of errors or discrepancies.
Cause – CFSA does not have adequate controls in place to ensure that review and approval of provider’s quarterly reports are documented.
Recommendation - We recommend CFSA strengthen its policies and procedures to address the review and approval process for the provider’s quarterly reports.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – CFSA concurs with this finding. The Agency also notes that quarterly cost reports are submitted to a central repository email inbox that is staffed by the five members of the BSA invoicing/cost reporting team. Each member maintains a provider-specific portfolio and is responsible for review and approval of provider cost reports within that portfolio. Moreover, the providers prepare these cost reports in close collaboration with CFSA’s Business Services Administration such that issues and questions are generally already addressed prior to submission. There is correspondence when corrections or inconsistencies need to be addressed, but there has been no formal correspondence when the reports are acceptable as submitted.
The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-030
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Children’s Health Insurance Program
ALN: 93.767
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the CHIP benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 40 participant files tested, we noted the following exception:
• For one (1) participant file, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-031
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per Section 1927 of the Social Security Act (42 USC 1396r-8): Drug manufacturers are required to provide a listing to CMS of all covered outpatient drugs and; and on a quarterly basis, are required to provide their average manufacturer’s price and their best prices for each covered outpatient drug. Based on these data, CMS calculates a unit rebate amount for each drug, which it then provides to States. Each State agency under this subchapter shall report to each manufacturer not later than 60 days after the end of each rebate period and in a form consistent with a standard reporting format established by the Secretary, information on the total number of units of each dosage form and strength and package size of each covered outpatient drug dispensed after December 31, 1990, for which payment was made under the plan during the period, and shall promptly transmit a copy of such report to the Secretary.
The CMS Medicaid Drug Rebate Data Guide requires that upon receipt of a quarterly invoice, labelers have 37 calendar days from the invoice postmark date to pay rebates before interest begins to accrue. In those instances where states have used a meter to postmark the envelope and the United States Postal Service (USPS) or common mail carrier has also postmarked the envelope, the postmark date of the USPS or common mail carrier should be used to track the interest start date. For invoices that are submitted electronically, states should be able to identify the date on which the electronic invoice was received in order to properly track the interest start date.
Interest stops accruing on the postmark date of the labeler’s mailed check, the date the state applies a credit to the labeler, or the date on which a state provides written acknowledgment to the labeler of the resolution. On the 38th day from the date interest originally began accruing, any unpaid interest becomes principal and interest accrues on the new principal amount beginning on the 38th day after that.
Condition – During our review of 60 samples of drug rebates, we noted that for one (1) rebate, the manufacturer did not pay the rebate within 37 days after receiving the invoice from the DHCF, however, no interest was calculated and charged to the drug manufacturer.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DHCF’s compliance with the drug rebates requirements using a statistically valid sample.
Effect – Without adequate policies and procedures in place, there is no assurance that drug rebates are paid, or interest is assessed when rebates are not paid timely.
Cause – The manufacturer didn’t receive their invoice and the contractor reproduced it for them. The mail date was not updated correctly in their system thus causing no interest to be calculated.
Recommendation - We recommend that DHCF establish policies and procedures to ensure that the mail date of invoices to manufacturers are correctly updated in the system to ensure interest is calculated and assessed when drug rebates are not paid timely.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DHCF agrees with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-032
Prior Year Finding Number: 2022-020
Compliance Requirement: Eligibility
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Medicaid Cluster
ALN: 93.775, 93.777, 93.778
Award #: Various
Award Year: 10/01/2022 – 09/30/2023 Department of Health Care Finance (DHCF)/Department of Human Services (DHS)/Economic Security Administration (ESA)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The Medicaid State Plan: Citation 42 CFR Section 431.17AT-79-29. Section 4.7 (Maintenance of Records) states, “The Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of medical assistance, and administrative costs and statistical, fiscal and other records necessary for reporting and accountability, and retains these records in accordance with Federal requirements. All requirements of 42 CFR 431.17 are met.”
Economic Security Administration (ESA) Policy Manual, Section 1.3, “All eligibility criteria and clarifying information are documented on the Record of Case Action, form 1052. The case record should speak for itself. An outside reviewer shall be able to follow the chronology of events in the case be reading the narrative. All application documents including verification and correspondence must be date-stamped. For working recipients, the record should include the dates pay is received and how often the recipient is paid. When the recipient’s statement is the best available source, the record should include the application/recipient and agency efforts to verify the information. All address changes should be documented.”
Condition – During testing over beneficiary eligibility for the Medicaid benefits, we noted that the District’s Economic Security Administration (ESA) was unable to provide sufficient documentation to support the beneficiary’s eligibility determination during the fiscal year 2023 audit. Specifically, out of a sample of 132 participant files tested, we noted the following exception:
• For twenty (20) participant files, ESA did not process the application within the required timeframe.
The Department of Health Care Finance, as the State Medicaid Agency, lacks a quality control oversight system to ensure that eligibility documentation and verification is maintained to support the eligibility decision.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of ESA’s compliance with specified requirements using a statistically valid sample.
Effect – Lack of supporting documentation for program services and noncompliance with program requirements could result in disallowances of costs and participants could be receiving benefits that they are not entitled to receive under the program.
Cause – DHCF and ESA did not appear to adhere to internal control procedures to ensure that applications are properly processed in accordance with Federal Regulations.
Recommendation - We recommend that ESA strictly implement internal control procedures to ensure that documentation is maintained to support the beneficiary determinations.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – ESA concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-033
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Per 2 CFR Section 200.403, “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.”
Condition – During our testwork for the Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted the following in our sample of sixty-four (64) items:
• For one (1) out of the 64 samples, DBH did not provide adequate supporting documentation for year-end accrual for subrecipient expenditures amounting to $238,548.
Questioned Costs – Known amount is $238,548.
Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $7,294,191.
Effect – Lack of supporting documentation could result in disallowances of costs and DBH may have drawn down federal monies in excess of the expenditures incurred.
Cause – DBH did not have adequate controls in place to ensure that expenditures accrued were actually incurred by the subrecipient.
Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-034
Prior Year Finding Number: N/A
Compliance Requirement: Cash Management
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
The OMB Compliance Supplement states that when entities are funded on a reimbursement basis, program costs must be incurred prior to the date of the reimbursement request.
Condition – During our testing of individual draws of federal funds, we noted that for one (1) of three (3) samples tested, the amount drawn exceeded the expenditures incurred. Cash draws appear to have exceed expenditures and DBH remitted $0 interest and/or refunds were remitted to the Federal government by DBH. In addition, we noted management did not provide a complete reconciliation between the cash drawdown schedule to the Schedule of Expenditures of Federal Awards (SEFA).
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. The sample drawdown was $9,262,365 and only supported by expenditures of $9,161,518, thus overdrawing by $100,847. Total drawdowns selected for testing amounted to $24,170,641.
Effect – DBH is not in compliance with cash management requirements. Requests for federal funds for the program were not based on the amount of actual disbursements and requests did not support the actual expenditures. This could subject DBH to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the agency to paying interest charges on these draws.
Cause – DBH did not have adequate controls in place to ensure that expenditures accrued were actually incurred by the subrecipient.
Recommendation – We recommend that DBH strengthen internal control procedures to ensure that expenditures are allowable, and that sufficient documentation is retained to support that allowability.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-035
Prior Year Finding Number: N/A
Compliance Requirement: Reporting
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Federal Awardee Performance and Integrity Information System (FAPIIS) Reporting Compliance: In accordance with the regulatory requirements provided at 45 CFR 75.113 and Appendix XII to 45 CFR Part 75, recipients that have currently active Federal grants, cooperative agreements, and procurement contracts with cumulative total value greater than $10,000,000 must report and maintain information in the System for Award Management (SAM) about civil, criminal, and administrative proceedings in connection with the award or performance of a Federal award that reached final disposition within the most recent five-year period or affirm that there is no new information to report. The recipient must also make semiannual disclosures regarding such proceedings. Proceedings information will be made publicly available in the designated integrity and performance system (currently the FAPIIS).
Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: The FFATA (Pub. L. No. 109-282, as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management’s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management’s objectives are achieved.
Federal Financial Report (FFR) Controls over Reporting Compliance: In addition, 2 CFR 200.333 requires that financial records, supporting documents, statistical records, and all other non-federal entity records pertinent to a federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the federal awarding agency or pass-through entity in the case of a subrecipient.
Performance Progress Report (PPR) Underlying Data: The audit objective for the Reporting compliance requirement stated in the 2 CFR Part 200, appendix XI Compliance Supplement is as follows: Determine whether required reports for Federal awards include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements.
Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also 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 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use.
Condition – During our testing of the reporting compliance requirement, we noted the following:
• FAPIIS Reporting Compliance: During our testing of FAPIIS reporting for fiscal year ended September 30, 2023, it was noted that the program’s reporting regarding civil, criminal, and administrative proceedings in connection with the award or performance of a Federal award that reached final disposition within the most recent five-year period or affirmation that there was no new information to report was not submitted by the DBH program management.
• FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were not submitted by the DBH program management. DBH program management was not aware of FFATA reporting requirement and did not report subawards within the FSRS website during the award year. None of the ten subawards selected for testing were reported to FSRS. Total subawards tested were $3,559,912, and $0 was reported as required by FFATA requirements.
• FFR Controls over Reporting Compliance: DBH’s control over compliance for financial reporting is as follows: “All reports are reviewed by the Accounting Officer or Agency Fiscal Officer prior to submission to the Federal government. DBH Program and Fiscal Services staff review programmatic and financial reports.” We noted DBH did not have documentation of the control over compliance, as well as the review and approval of the Financial Reporting Report (FFR or SF-425).
• PPR Reporting Compliance: We found DBH did not have documentation for the information, and the source of the information, it used in its Opioid program’s Performance Progress Report. Information as reported on the reports is unsupported as management did not retain the underlying data.
• SEFA Reporting Compliance: During our testing for the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2023, DBH incurred $12,800,130 in subrecipient expenditures for this program and incorrectly reported that there were no subrecipient expenditures on the draft SEFA. The error was subsequently identified and corrected as a result of the audit process. While the subrecipient expenditure column was not accurate, the total expenditure column was accurately reported.
Questioned Costs – None.
Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample.
Effect – Without proper internal controls and policies and procedures in place to ensure that correct amounts were reported and were properly reviewed, the Opioid STR program:
• FAPIIS Reporting Compliance: DBH management did not report the necessary FAPIIS information for Opioid STR in accordance with Federal requirements.
• FFATA Reporting Compliance: DBH management did not report the necessary FFATA report for Opioid STR first-tier subawards over $30,000 to the FFATA Subaward Reporting System in accordance with FFATA requirements.
• FFR Controls over Reporting Compliance: There is an increased risk of errors occurring and going undetected, or errors being present in reports if no review and approval occurred.
• PPR Reporting Compliance: DBH cannot be assured that it reported complete and accurate information to enable the Substance Abuse and Mental Health Services Administration (SAMHSA), an operating division of the Department of Health and Human Services (HHS), to assess the outcomes of the State’s use of Opioid program funding.
• SEFA Reporting Compliance: The effect of the condition found is that the SEFA was not accurately prepared.
Cause – Management did not have proper internal controls and policies and procedures in place to ensure that the amounts on the FAPIIS, FFATA, FFR, PPR and SEFA were properly reported, and the reports were properly reviewed and approved.
Recommendation – We recommend the following:
• FAPIIS Reporting Compliance: We recommend DBH to evaluate its reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report information before it is submitted. Further, we recommend that DBH collect, and report complete and accurate information regarding FAPIIS.
• FFATA Reporting Compliance: We recommend DBH to evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website. Further, we recommend DBH collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act.
• FFR Controls over Reporting Compliance: We recommend DBH to design and implement procedures to ensure sufficient documentation is maintained that supports the review and approval of the FFR.
• PPR Reporting Compliance: We recommend DBH to develop formal, written procedures to identify the sources of information necessary and steps needed to compile accurate and complete information for the Opioid program performance reports; and retain in a central location all documentation that it used to support information included in each performance report it submits to the federal government.
• SEFA Reporting Compliance: We recommend DBH to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review its existing policies and procedures for preparing the Schedule of Expenditures of Federal Awards to ensure that it is complete and accurate.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH agrees with these findings and plans to address reporting requirements to ensure that the FAPIIS, FFATA, FFR, PPR and SEFA are completed accurately and on the required schedule. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-036
Prior Year Finding Number: N/A
Compliance Requirement: Subrecipient Monitoring
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Eligibility of Subrecipients: The Substance Abuse and Mental Health Services Administration (SAMHSA) promulgated the Funding Opportunity Announcement (FOA) No. TI-20-012 to seek applicants for the Opioid STR federal program. Page 67 of the FOA states “Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal award, including a portion of the scope of work or objectives. Grant recipients are responsible for ensuring that all subrecipients comply with the terms and conditions of the award, per 45 CFR Section 75.101.” This provision indicates that 45 CFR Section 75.202 applies to all grant agreements, including subawards. 45 CFR Section 75.202(b) requires the federal awarding agency must provide certain information about the federal award and states, in part (5), General Eligibility Requirements, The statutory, regulatory or other eligibility factors or considerations that determine the applicant’s qualification for Federal awards under the program (e.g., type of non-Federal entity).
Earmarking Requirements for Subrecipients: Award recipients must continue to comply with the requirements for subrecipients monitoring and management as outlined in the provisions of 45 CFR Section 75.351-352 and should ensure written subaward/subcontract agreements are in place. The written agreement must require that subrecipients comply with the same terms and conditions as the prime recipient, as applicable (i.e., financial management requirements, audit requirements, etc.) and should describe the scope of work, deliverables, etc. The grant agreements provide that the District may use no more than ten (10) percent of the total grant award for administrative costs and developing the infrastructure necessary for expansion of services. Also, no more than ten (10) percent of the total grant award may be used for data collection, performance measurement, and performance assessment, including incentives for participating in the required data collection follow-up.
Monitoring of Subrecipients: Uniform Guidance in 2 CFR Section 200.331(a) requires that pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions. Also, in accordance with the requirements of 2 CFR Section 1402.300, the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR part 170 Reporting Subaward and Executive Compensation Information.
Condition – During our testing of Subrecipient Monitoring compliance requirement, we noted the following:
For Eligibility of Subrecipients: We identified ten (10) instances out of ten (10) tested, in which the subrecipients’ eligibility determination was not documented or maintained.
Earmarking Requirements for Subrecipients: During our testing of the State Targeted Response to the Opioid Crisis Program, we noted that the agency used a different established indirect cost rate in monitoring the earmarking of awardees than the maximum administrative costs/indirect costs. For three (3) out of ten (10) samples selected for testing, the awardees exceeded the ten (10) percent funding limitation for administrative costs/indirect costs. Also, DBH does not have a process to monitor the ten (10) percent earmarking requirement for costs of developing the infrastructure necessary for expansion of services; and for data collection, performance measurement, and performance assessment, including incentives for participating in the required data collection follow-up.
Monitoring of Subrecipients: Although, DBH performs risk assessment and site visits to monitor subrecipients, we noted three (3) instances out of ten (10) samples, in which the subrecipients’ site visit and/or risk assessment was not documented or maintained. In addition, DBH did not track subrecipient costs versus vendor costs within their financial reporting system, which resulted to issues in verifying the completeness and accuracy of subrecipient population.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of DBH’s compliance with specified subrecipient monitoring requirements using a statistically valid sample.
Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved.
Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance.
Recommendation – We recommend that DBH maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients.
Related Noncompliance – Material noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls into place to resolve the issues. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-037
Prior Year Finding Number: N/A
Compliance Requirement: Special Tests and Provisions – Key Employees
Program: Government Department/Agency:
U.S. Department of Health and Human Services
Opioid STR
ALN: 93.788
Award #: Various
Award Year: 09/30/2020 – 09/29/2024 Department of Behavioral Health (DBH)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
2 CFR 200.508(d) says an auditee must “provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit required by this part.”
The grant agreements provide that the State must maintain certain key personnel. Key personnel are organization staff members or consultants/subrecipients who must be part of the project regardless of whether they receive a salary or compensation from the project. These individuals must make a substantial contribution to the execution of the project. Key Personnel for this program are the Project Director, Project Coordinator, and Data Coordinator at a 1.0 FTE (100 percent level of effort) for each position. This position requires prior approval by SAMHSA after a review of staff credentials and job descriptions. Any changes to key personnel, including level of effort involving separation from the project for more than three months or a 25 percent reduction in time dedicated to the project, requires prior approval, and must be submitted as a post-award amendment.
Condition – During our testing of the key personnel requirement, we noted that for three (3) key employees tested out of three (3), we were unable to review documentation to support that the employee worked 100% on the award as required by the grant agreement.
Questioned Costs – None.
Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample.
Effect – There is a risk that employees are working on the program that are not approved by the granting agency.
Cause – Management has not established internal control policies and procedures around communicating to the employees that they are being assigned to the Opioid program.
Recommendation – We recommend that DBH develop and implement policies, procedures and controls to ensure proper documentation of the required and actual time and effort from key employees in accordance with grant requirements.
Related Noncompliance – Noncompliance.
Views of Responsible Officials and Planned Corrective Actions – DBH agrees with the findings and will put controls into place to resolve the issues. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.