FINDING 2023-003
Subject: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting
Federal Agency: Department of Health and Human Services
Federal Program: Medical Assistance Program
Assistance Listings Number: 93.778
Federal Award Number and Year (or Other Identifying Number): FY 2023
Pass-Through Entity: Indiana Family and Social Services Administration
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-002.
Condition and Context
The Township had not properly designed or implemented a system of internal controls which would
include appropriate segregation of duties that would likely be effective in preventing, or detecting and
correcting, material noncompliance related to expenditures made from the Medicaid Cluster.
INDIANA STATE BOARD OF ACCOUNTS
17
WAYNE TOWNSHIP, MARION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The Medicaid Cluster consists of three federal programs. However, the Township received funding
from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding
is provided by the Indiana Family and Social Services Administration to Freestanding Governmental
Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for
funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction
with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal
ambulance payment adjustment, the amount received by the Township.
The Township utilized its Fire Fighting Fund to account for both fire and ambulance services. Costs
were allocated between fire and ambulance services as necessary. Expenditures related to ambulance
services were included in the Township's Cost Report to determine the reimbursement due to the Township.
The funding received during the audit period was based on expenditures and data from January 1, 2020
through December 31, 2020, and as such, internal controls for that period were reviewed.
The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm
using information provided by the Township. The Township provided expenditure data, reports detailing
run data, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared and
submitted the report. The Township did not participate in the preparation or submission process, nor
complete a review of the report prior to submission. As such, the Township could not ensure that the
information provided was properly utilized or that the report was accurate.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define
the acceptable minimum level of internal control standards. To provide clarifying guidance, the State
Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana
Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these
standards. The standards include adequate control activities. According to this manual:
"Control activities are the actions and tools established through policies and procedures that
help to detect, prevent, or reduce the identified risks that interfere with the achievement of
objectives. Detection activities are designed to identify unfavorable events in a timely manner
whereas prevention activities are designed to deter the occurrence of an unfavorable event.
Examples of these activities include reconciliations, authorizations, approval processes, performance
reviews, and verification processes.
An integral part of the control activity component is segregation of duties. . . .
INDIANA STATE BOARD OF ACCOUNTS
18
WAYNE TOWNSHIP, MARION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
There is an expectation of segregation of duties. If compensating controls are necessary, documentation
should exist to identify both the areas where segregation of duties are not feasible
or practical and the compensating controls implemented to mitigate the risk. . . ."
Cause
A proper system of internal controls over Activities Allowed or Unallowed, Allowable Costs/Cost
Principles, and Reporting for the Medicaid Cluster expenditures was not designed by management of the
Township, which would include segregation of key functions to ensure Medicaid Cluster funds were being
used appropriately. Embedded within a properly designed and implemented internal control system should
be internal controls consisting of policies and procedures. Policies reflect the Township's management
statements of what should be done to effect internal controls, and procedures should consist of actions that
would implement these policies. The Township first became aware of this internal control deficiency during
the 2022 audit; however, since the expenditure reimbursements by the awarding agency are on a threeyear
cycle, the reimbursements received in 2023 were for submissions made for 2020 reporting. During
2020, the Township was unaware of the lack of internal controls.
Effect
Without the proper implementation of an effectively designed system of internal controls, including
policies and procedures that provide segregation of duties and additional oversight as needed, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions
of the federal award could result in the loss of future federal funding to the Township.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the Township's management design and implement a proper system of
internal controls including policies and procedures that would include segregation of duties for the
preparation and approval of expenditure reports to ensure the accuracy of such reports.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003
Subject: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting
Federal Agency: Department of Health and Human Services
Federal Program: Medical Assistance Program
Assistance Listings Number: 93.778
Federal Award Number and Year (or Other Identifying Number): FY 2023
Pass-Through Entity: Indiana Family and Social Services Administration
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-002.
Condition and Context
The Township had not properly designed or implemented a system of internal controls which would
include appropriate segregation of duties that would likely be effective in preventing, or detecting and
correcting, material noncompliance related to expenditures made from the Medicaid Cluster.
INDIANA STATE BOARD OF ACCOUNTS
17
WAYNE TOWNSHIP, MARION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The Medicaid Cluster consists of three federal programs. However, the Township received funding
from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding
is provided by the Indiana Family and Social Services Administration to Freestanding Governmental
Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for
funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction
with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal
ambulance payment adjustment, the amount received by the Township.
The Township utilized its Fire Fighting Fund to account for both fire and ambulance services. Costs
were allocated between fire and ambulance services as necessary. Expenditures related to ambulance
services were included in the Township's Cost Report to determine the reimbursement due to the Township.
The funding received during the audit period was based on expenditures and data from January 1, 2020
through December 31, 2020, and as such, internal controls for that period were reviewed.
The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm
using information provided by the Township. The Township provided expenditure data, reports detailing
run data, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared and
submitted the report. The Township did not participate in the preparation or submission process, nor
complete a review of the report prior to submission. As such, the Township could not ensure that the
information provided was properly utilized or that the report was accurate.
The lack of internal controls was a systemic issue throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define
the acceptable minimum level of internal control standards. To provide clarifying guidance, the State
Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana
Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these
standards. The standards include adequate control activities. According to this manual:
"Control activities are the actions and tools established through policies and procedures that
help to detect, prevent, or reduce the identified risks that interfere with the achievement of
objectives. Detection activities are designed to identify unfavorable events in a timely manner
whereas prevention activities are designed to deter the occurrence of an unfavorable event.
Examples of these activities include reconciliations, authorizations, approval processes, performance
reviews, and verification processes.
An integral part of the control activity component is segregation of duties. . . .
INDIANA STATE BOARD OF ACCOUNTS
18
WAYNE TOWNSHIP, MARION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
There is an expectation of segregation of duties. If compensating controls are necessary, documentation
should exist to identify both the areas where segregation of duties are not feasible
or practical and the compensating controls implemented to mitigate the risk. . . ."
Cause
A proper system of internal controls over Activities Allowed or Unallowed, Allowable Costs/Cost
Principles, and Reporting for the Medicaid Cluster expenditures was not designed by management of the
Township, which would include segregation of key functions to ensure Medicaid Cluster funds were being
used appropriately. Embedded within a properly designed and implemented internal control system should
be internal controls consisting of policies and procedures. Policies reflect the Township's management
statements of what should be done to effect internal controls, and procedures should consist of actions that
would implement these policies. The Township first became aware of this internal control deficiency during
the 2022 audit; however, since the expenditure reimbursements by the awarding agency are on a threeyear
cycle, the reimbursements received in 2023 were for submissions made for 2020 reporting. During
2020, the Township was unaware of the lack of internal controls.
Effect
Without the proper implementation of an effectively designed system of internal controls, including
policies and procedures that provide segregation of duties and additional oversight as needed, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions
of the federal award could result in the loss of future federal funding to the Township.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the Township's management design and implement a proper system of
internal controls including policies and procedures that would include segregation of duties for the
preparation and approval of expenditure reports to ensure the accuracy of such reports.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.