(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-028) Title: Internal control over EBT card security needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued by EPPIC and mailed to the client?s home address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receiving returned cards, record keeping activity, and actual destruction or retransmission of cards. Returned EBT cards are either destroyed or retransmitted and these actions are tracked using two separate spreadsheets. The Department has not implemented segregation of duties within the process to ensure that the activity recorded on the spreadsheets aligns with the activity that occurred. In addition, the existing process does not require that returned EBT cards are secured; returned cards are placed in an open mailbox during processing. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the tracking spreadsheets. Three returned EBT cards were disabled in EPPIC between two and seven months before being recorded as destroyed. Since documentation noting the date of receipt at DHHS is not maintained, OSA was unable to verify the security of the EBT card during the extended periods of inactivity. OSA selected a non-statistical random sample. Additional analytical procedures identified: ? two returned EBT cards which were included on both spreadsheets. Additional audit procedures identified that these cards should have been logged as retransmitted. ? three returned EBT cards which were processed utilizing inaccurate client information. Multiple client names were tied to the same client identification number. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. The Department processed 2,200 returned EBT cards; 790 were recorded as retransmitted and 1,410 were recorded as destroyed. Cause: ? Lack of policies and procedures relating to the security of returned EBT cards ? Lack of segregation of duties Effect: Potential unauthorized use of EBT cards Recommendation: We recommend that the Department implement procedures to maintain adequate security over returned EBT cards, including proper segregation of duties within the process. Corrective Action Plan: See F-13 Management?s Response: The Department agrees with this finding. The Department acknowledges the need to implement a revised SOP governing returned card processing. The revised SOP will include clear segregation of duties to include enhanced management oversight by and between personnel involved. The Department disagrees that adequate security controls are not maintained. Undeliverable EBT cards are delivered to a regional office each business day, and those cards are worked the day they are received. They are placed in the mailbox of a clerical resource that works in the office. The mailbox is located in an area restricted to those that have badge access. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The State is required by Federal regulations to maintain minimum security procedures for EBT cards that include secure storage and limited access. An unsecured mailbox in a location accessible to numerous employees not authorized to handle returned EBT cards is not secure storage or limited access. In addition, because documentation noting the date of receipt of returned EBT cards at DHHS is not maintained, OSA is unable to verify that cards are processed on the date of receipt. The finding remains as stated. (State Number: 22-1108-02)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-039) Title: Internal control over WIC subrecipient monitoring needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 246.19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department shall establish an ongoing management evaluation system which includes the monitoring of local agency operations, the review of local agency financial and participation reports, the development of corrective action plans to resolve program deficiencies, the monitoring of implementation of the corrective action plans, and on-site visits. The results of such actions must be documented. Monitoring of local agencies must encompass evaluation of management, certification, nutrition education, breastfeeding promotion and support, participant services, civil rights compliance, accountability, financial management systems, and food delivery systems. The Department must conduct monitoring reviews of each local agency at least once every two years. Monitoring must include on-site reviews of a minimum of 20 percent of the clinics in each local agency, or one clinic, whichever is greater. Condition: The State contracts with eight local agencies to administer the WIC program. The Department is required to perform management evaluation reviews (MERs) of each local agency at least once every two years. The Department performed full-year MERs for five of the eight local agencies during fiscal year 2022. In the Office of the State Auditor?s (OSA?s) testing: ? three local agencies had full-year MERs, conducted in excess of the two-year timeframe: o one local agency MER due in July 2020 was not performed until September 2021; o one local agency MER due in April 2020 was not performed until May 2021; and o one local agency MER due in October 2020 was not performed until November 2021. ? the financial review portion of the MER was not completed for any of the five local agencies. Of the three remaining local agencies for which the Department did not perform a full-year MER during fiscal year 2022: ? one local agency MER due in November 2021 was not performed during the fiscal year. ? two local agencies were not due for a full-year MER until after audit testing; therefore, OSA did not perform audit testing on these local agency MERs. Context: The Department provided $3.6 million in WIC program funds to eight local agencies in fiscal year 2022. Cause: ? Lack of staff resources available to perform the financial portion of the MERs ? Lack of supervisory oversight Effect: ? Federal programs may not be effectively and efficiently administered. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department: ? implement a process to ensure that the backlog of reviews is completed; ? review its staffing needs to ensure there are adequate resources allocated to the MER process to ensure all portions of the reviews are fully completed; and ? implement additional oversight procedures to ensure all portions of the reviews are fully completed. Corrective Action Plan: See F-16 Management?s Response: The Department agrees with this finding. WIC completed five MERs for FY 22, due to COVID and lack of personnel the three remaining MERs were delayed. WIC is working to catch up on MERs and has begun working with additional staff from DHHS Internal Audit to aid in completing the MER financial component timelier. The training and planning with the DHHS Internal Audit team is underway. All local agencies were monitored for FY22. Contact: Ginger Roberts-Scott, Senior Health Program Manager, DHHS, 207-287-5342 (State Number: 22-1113-03)
(2022-040) Title: Internal control over WIC cash balances needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. Condition: The Office of the State Auditor (OSA) issued finding 2019-021 as a result of procedures performed for the fiscal year 2019 audit. This finding identified that ?Program personnel did not take the existing cash balance into consideration when requesting Federal funds for the Food portion of the WIC grant.? This resulted in an excess cash balance for the Food grant. The finding was repeated as finding 2020-021 for the fiscal year 2020 audit and finding 2021-018 for the fiscal year 2021 audit. In response to these findings, the Department performed a reconciliation of all prior grant awards to determine the cause of the excess cash balance. This reconciliation identified a $1,055,088 discrepancy between the State?s accounting system, WIC reporting. and Federal draws from the 2013 WIC Food grant. Context: The Department calculated a $1,055,088 residual cash balance from WIC Food grant awards issued in 2013. Cause: Lack of adequate recordkeeping and account reconciliation in prior years Effect: The State may be required to return $1,055,088 to the Federal awarding agency. Recommendation: We recommend that the Department contact the Federal awarding agency to resolve this matter. Corrective Action Plan: See F-16 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. To date, considerable effort has been invested in performing grant reconciliations from present back to 2013. Reconciling grants and matching revenues to expenses is labor intensive and takes detailed transaction level analysis. The Department will finalize the reconciliations and take the necessary steps to put the cash balances where they belong. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1113-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-039) Title: Internal control over WIC subrecipient monitoring needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 246.19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department shall establish an ongoing management evaluation system which includes the monitoring of local agency operations, the review of local agency financial and participation reports, the development of corrective action plans to resolve program deficiencies, the monitoring of implementation of the corrective action plans, and on-site visits. The results of such actions must be documented. Monitoring of local agencies must encompass evaluation of management, certification, nutrition education, breastfeeding promotion and support, participant services, civil rights compliance, accountability, financial management systems, and food delivery systems. The Department must conduct monitoring reviews of each local agency at least once every two years. Monitoring must include on-site reviews of a minimum of 20 percent of the clinics in each local agency, or one clinic, whichever is greater. Condition: The State contracts with eight local agencies to administer the WIC program. The Department is required to perform management evaluation reviews (MERs) of each local agency at least once every two years. The Department performed full-year MERs for five of the eight local agencies during fiscal year 2022. In the Office of the State Auditor?s (OSA?s) testing: ? three local agencies had full-year MERs, conducted in excess of the two-year timeframe: o one local agency MER due in July 2020 was not performed until September 2021; o one local agency MER due in April 2020 was not performed until May 2021; and o one local agency MER due in October 2020 was not performed until November 2021. ? the financial review portion of the MER was not completed for any of the five local agencies. Of the three remaining local agencies for which the Department did not perform a full-year MER during fiscal year 2022: ? one local agency MER due in November 2021 was not performed during the fiscal year. ? two local agencies were not due for a full-year MER until after audit testing; therefore, OSA did not perform audit testing on these local agency MERs. Context: The Department provided $3.6 million in WIC program funds to eight local agencies in fiscal year 2022. Cause: ? Lack of staff resources available to perform the financial portion of the MERs ? Lack of supervisory oversight Effect: ? Federal programs may not be effectively and efficiently administered. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department: ? implement a process to ensure that the backlog of reviews is completed; ? review its staffing needs to ensure there are adequate resources allocated to the MER process to ensure all portions of the reviews are fully completed; and ? implement additional oversight procedures to ensure all portions of the reviews are fully completed. Corrective Action Plan: See F-16 Management?s Response: The Department agrees with this finding. WIC completed five MERs for FY 22, due to COVID and lack of personnel the three remaining MERs were delayed. WIC is working to catch up on MERs and has begun working with additional staff from DHHS Internal Audit to aid in completing the MER financial component timelier. The training and planning with the DHHS Internal Audit team is underway. All local agencies were monitored for FY22. Contact: Ginger Roberts-Scott, Senior Health Program Manager, DHHS, 207-287-5342 (State Number: 22-1113-03)
(2022-040) Title: Internal control over WIC cash balances needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. Condition: The Office of the State Auditor (OSA) issued finding 2019-021 as a result of procedures performed for the fiscal year 2019 audit. This finding identified that ?Program personnel did not take the existing cash balance into consideration when requesting Federal funds for the Food portion of the WIC grant.? This resulted in an excess cash balance for the Food grant. The finding was repeated as finding 2020-021 for the fiscal year 2020 audit and finding 2021-018 for the fiscal year 2021 audit. In response to these findings, the Department performed a reconciliation of all prior grant awards to determine the cause of the excess cash balance. This reconciliation identified a $1,055,088 discrepancy between the State?s accounting system, WIC reporting. and Federal draws from the 2013 WIC Food grant. Context: The Department calculated a $1,055,088 residual cash balance from WIC Food grant awards issued in 2013. Cause: Lack of adequate recordkeeping and account reconciliation in prior years Effect: The State may be required to return $1,055,088 to the Federal awarding agency. Recommendation: We recommend that the Department contact the Federal awarding agency to resolve this matter. Corrective Action Plan: See F-16 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. To date, considerable effort has been invested in performing grant reconciliations from present back to 2013. Reconciling grants and matching revenues to expenses is labor intensive and takes detailed transaction level analysis. The Department will finalize the reconciliations and take the necessary steps to put the cash balances where they belong. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1113-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-041) Title: Internal control over CACFP claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $11,222 Likely Questioned Costs: Undeterminable. Due to the variety of institution types in the test population and varied meal claim counts, the projection of questioned costs utilizing the error rate related to the known exception and amount tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 226.7, .10, .11, and .16 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Each State agency shall establish procedures for institutions to properly submit claims for reimbursement (CFR). Such procedures must include State agency edit checks, including but not limited to ensuring that payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment, operating days, and approved meal types. Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must conduct reasonable edit checks on the sponsored centers? meal claims. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes (DCHs), and at-risk after school snack programs. Each child and adult care center, including day-care homes, must submit a monthly CFR to the State. CFRs by DCHs are first submitted to Sponsoring Organizations (SOs). SOs are responsible for reviewing and consolidating claims into one comprehensive CFR for submission to the State agency. The State reimburses the SOs and centers for actual meals served based on the CFR. The State utilizes the Child Nutrition Program Web (CNPWeb) system to process monthly claims. System edits were relied upon when the claims were submitted; however, edits were not properly implemented during fiscal year 2022. Furthermore, the Department did not obtain enrollment data from DCHs to set maximum claim reimbursement restrictions when processing claims. The Office of the State Auditor (OSA) tested meal counts claimed on 60 CFRs submitted by SOs and found that 14 contained discrepancies. The SOs? CFRs included meals claimed that exceeded the allowable licensed capacity for facilities included in the consolidated CFR. OSA relied on licensed capacity rather than enrollment data when testing claims, as enrollment data was not obtained by the Department. The meals claimed for reimbursement exceeded licensed capacity for 14 facilities. The amount paid over allowable capacity for these facilities totaled $11,222. The Department could not provide documentation to support that the amount paid in excess of capacity was allowable. OSA deemed monthly reimbursements to one SO to be significant to CACFP. To test a sample of claims for this SO, OSA selected all 12 months of the SO?s CFRs and used a risk-based approach for DCH claims and a random approach for all other claims. OSA selected a non-statistical random sample of claims from all other facilities and SOs for the remaining sample. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $5.7 million was paid through SOs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures that require: ? review, approval and testing of system controls to ensure that edit checks are operating as designed; and ? review of monthly CFRs for accuracy. We further recommend that the Department follow up with SOs to identify unallowable costs and recoup costs if warranted. Corrective Action Plan: See F-16 Management?s Response: The Department disagrees with this finding. As explained to OSA by DOE, DHHS, and USDA, Child Care Centers/Providers can enroll and claim over the licensed capacity. The claim edit check that was in place for SY22 for DCH Providers was Total Monthly Attendance x Approved Meal Types due to the fact that providers can enroll over the licensed capacity. Sponsors have been trained: Total Monthly Attendance equals the number of unique kids who attended during the day, are enrolled in CACFP and who ate at least one meal or snack during the day, then add up those daily totals for the month. To use licensed capacity as an edit check, which OSA did to calculate the costs in question, disallows provider reimbursement for eligible meals. CACFP Total Monthly Attendance is a better edit check as it only calculates attendance for enrolled participants. For the provider claims in question the CACFP Team tested them against the Total Monthly Attendance edit check and none suggest an overclaim. The CACFP Team discovered the missing enrollment edit check on 8/24/22 and immediately submitted a ticket to the web designers. This correction required multiple meetings with the web designers and in-depth system testing. The correction to the edit check was completed on 12/23/22. The claim edit checks now in place are: Attendance x Approved Meal Types (same as before) ? AND- Enrollment x Operating Days x Approved Meal Types. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor?s Concluding Remarks: In accordance with 7 CFR 226.7(k), the Department must establish procedures for facilities to properly submit claims; however, the Department did not have the following procedures in place: ? The Department did not obtain enrollment data to be utilized in the calculation of claims for reimbursement. ? The edit checks that the Department relied upon did not function as intended. The design and implementation of edit checks must ensure that: o payments are only made for approved meal types; and o the number of meals reimbursed does not exceed the total enrollment times the number of operating days times the approved meal types. The Department discovered that the edit checks were not operating as intended on August 24, 2022; however, the Department cannot provide evidence of when the failure occurred as the Department did not test system controls at any time during implementation. Furthermore, the discovery of failed edit checks was identified as a result of an inquiry made by USDA, not by Department controls. OSA also issued finding 2022-033, a material weakness for this system, due to the lack of controls over the system. As stated above and in the Condition of this finding, OSA could not use enrollment data to test the allowability of claims because this data was not obtained by the Department. As an alternative procedure, OSA identified DCHs with CFRs that exceeded licensed capacity and provided this information to the Department for consideration. The Department did not provide documentation to support the allowability of these CFRs, as OSA recognizes Child Care Centers/Providers can enroll and submit CFRs over licensed capacity. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award and must be adequately documented. Because the Department did not provide the requested documentation, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1115-01)
(2022-042) Title: Internal control over CACFP subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes, and at-risk after school snack programs. Child Nutrition Services (CNS) is responsible for monitoring 104 subrecipients that administer these services. Those monitoring procedures include verifying that subrecipients that expend over $750,000 obtain a Single Audit in accordance with Federal regulations. CACFP was previously administered by the State Department of Health and Human Services (DHHS) and subrecipient audits were tracked, received, and reviewed by DHHS? Division of Audit. Prior to fiscal year 2022, the administration of CACFP was moved to the Department of Education (DOE). DOE School Finance and Operations is responsible for the tracking, receipt, and review of subrecipient audits for most programs administered by DOE. CNS asserted that subrecipient audits for private non-profit institutions were received and forwarded to DOE School Finance and Operations for review; however, DOE only stored the audits. Neither CNS nor DOE could provide documentation to support that tracking of subrecipient audit reports was maintained or that reports were received and reviewed. As a result, 19 private non-profit subrecipients that reported receiving over $750,000 in Federal funds and required audits were not reviewed. Context: In fiscal year 2022, $9.3 million in CACFP funds was provided to 104 subrecipients, 51 of which are private non-profit subrecipients and 19 were required to have an audit. Cause: ? Lack of policies and procedures. CNS and DOE School Finance and Operations have not defined roles and responsibilities for tracking, receiving, and reviewing subrecipient audit reports. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that CNS and DOE School Finance and Operations collaborate on implementing policies and procedures that define the roles and responsibilities for tracking, receipt, and review of subrecipient audits. Corrective Action Plan: See F-17 Management?s Response: The Department agrees with this finding. Child Nutrition will implement policies and procedures for the tracking, receipt, and review of audits for subrecipients that expend over $750,000, in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1115-04)
(2022-043) Title: Internal control over CACFP eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $50,275 Likely Questioned Costs: Undeterminable. Likely questioned costs cannot be determined as the projection of questioned costs utilizing the error rate is not tested by dollar amount, but instead is based on eligibility. Criteria: 2 CFR 200.303; 7 CFR 226.2 and .6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State agency must establish application review procedures to determine eligibility of new and renewing institutions, and facilities for which applications are submitted by sponsoring organizations. Required enrollment information includes the number of enrolled participants that are eligible for free, reduced or paid meals. A for-profit center must have more than 25 percent of the children in care eligible for free or reduced price meals. Documentation that each for-profit center application meets the 25 percent definition is required. A pre-approval visit by the State agency to confirm the information in the institution?s application is required for all new applications. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes, and at-risk after school snack programs. Annually, these facilities must submit electronic applications and site information, including current enrollment data, for each location. The Department is required to review the application and determine whether the application should be approved or rejected. Before an application for a new facility is approved, the Department must complete a pre-approval site visit to verify that the information provided by the facility is complete and accurate. The Department has established procedures which require the use of a site visit checklist to ensure that all components of approval are reviewed. One requirement for approval included on the checklist is verification of enrollment data. Claims should not be processed or paid until the entire approval process, including the site visit, has been completed. The Office of the State Auditor (OSA) tested a sample of facilities determined eligible for CACFP and found one approved facility that should have been deemed ineligible. The facility reported a percentage of children eligible for free or reduced-price meals that did not meet the minimum 25 percent requirement for eligibility. Furthermore, the Department could not provide documentation to demonstrate that a pre-approval site visit was completed. The Department processed $50,275 in claims to this facility. OSA selected a non-statistical random sample. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $9.3 million was paid to facilities. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures that require: ? retention of documentation used to support facility applications including pre-approval site visit information and checklists, and ? review and approval of eligibility requirements for both new and annual renewal applications. This will ensure that all applications are accurate and complete and that funds are only provided to eligible facilities. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The Department has put additional procedures in place for the review and approval of eligibility requirements. The documentation to support facility applications was retained but was misplaced at the time of the audit. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor?s Concluding Remarks: Federal regulations state that for costs to be allowable under Federal awards, the costs must be adequately documented. The Department was unable to provide documentation to support information on the application. Therefore, the facility is ineligible and OSA questions the allowability of payments to the facility. The finding remains as stated. (State Number: 22-1115-02)
(2022-044) Title: Internal control over CACFP subrecipient risk evaluation procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to 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 procedures. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes, and at-risk after school snack programs. The Department is responsible for monitoring 104 subrecipients that administer these services. The level of monitoring required by Federal regulations must be determined using a risk-based approach. Subrecipient risk evaluation should include considerations of: ? the subrecipient?s experience with the program, ? the results of subrecipient audits, ? changes in personnel or systems, and ? the extent of Federal awarding agency monitoring procedures. CACFP regulations require the Department to monitor 33.3 percent of total active facilities in each review cycle (annually). In addition, all facilities must be monitored at least once every three years and Sponsoring Organizations (SOs) with 100 or more facilities must be monitored once every two years. SOs provide administration and support for smaller facilities. Department subrecipient monitoring procedures are based on CACFP regulations and do not use the risk-based approach as required by Federal regulations. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $9.3 million was provided to 104 subrecipients. Cause: Lack of adequate policies and procedures Effect: ? Noncompliance with Federal regulations ? Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department review and update policies and procedures to incorporate Federal regulations along with program regulations. The risk evaluation process should be documented and retained. Corrective Action Plan: See F-17 Management?s Response: The Department agrees with this finding. The CACFP team will create a risk assessment tool to use in scheduling subrecipient reviews. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1115-03)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-028) Title: Internal control over EBT card security needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued by EPPIC and mailed to the client?s home address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receiving returned cards, record keeping activity, and actual destruction or retransmission of cards. Returned EBT cards are either destroyed or retransmitted and these actions are tracked using two separate spreadsheets. The Department has not implemented segregation of duties within the process to ensure that the activity recorded on the spreadsheets aligns with the activity that occurred. In addition, the existing process does not require that returned EBT cards are secured; returned cards are placed in an open mailbox during processing. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the tracking spreadsheets. Three returned EBT cards were disabled in EPPIC between two and seven months before being recorded as destroyed. Since documentation noting the date of receipt at DHHS is not maintained, OSA was unable to verify the security of the EBT card during the extended periods of inactivity. OSA selected a non-statistical random sample. Additional analytical procedures identified: ? two returned EBT cards which were included on both spreadsheets. Additional audit procedures identified that these cards should have been logged as retransmitted. ? three returned EBT cards which were processed utilizing inaccurate client information. Multiple client names were tied to the same client identification number. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. The Department processed 2,200 returned EBT cards; 790 were recorded as retransmitted and 1,410 were recorded as destroyed. Cause: ? Lack of policies and procedures relating to the security of returned EBT cards ? Lack of segregation of duties Effect: Potential unauthorized use of EBT cards Recommendation: We recommend that the Department implement procedures to maintain adequate security over returned EBT cards, including proper segregation of duties within the process. Corrective Action Plan: See F-13 Management?s Response: The Department agrees with this finding. The Department acknowledges the need to implement a revised SOP governing returned card processing. The revised SOP will include clear segregation of duties to include enhanced management oversight by and between personnel involved. The Department disagrees that adequate security controls are not maintained. Undeliverable EBT cards are delivered to a regional office each business day, and those cards are worked the day they are received. They are placed in the mailbox of a clerical resource that works in the office. The mailbox is located in an area restricted to those that have badge access. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The State is required by Federal regulations to maintain minimum security procedures for EBT cards that include secure storage and limited access. An unsecured mailbox in a location accessible to numerous employees not authorized to handle returned EBT cards is not secure storage or limited access. In addition, because documentation noting the date of receipt of returned EBT cards at DHHS is not maintained, OSA is unable to verify that cards are processed on the date of receipt. The finding remains as stated. (State Number: 22-1108-02)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-028) Title: Internal control over EBT card security needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued by EPPIC and mailed to the client?s home address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receiving returned cards, record keeping activity, and actual destruction or retransmission of cards. Returned EBT cards are either destroyed or retransmitted and these actions are tracked using two separate spreadsheets. The Department has not implemented segregation of duties within the process to ensure that the activity recorded on the spreadsheets aligns with the activity that occurred. In addition, the existing process does not require that returned EBT cards are secured; returned cards are placed in an open mailbox during processing. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the tracking spreadsheets. Three returned EBT cards were disabled in EPPIC between two and seven months before being recorded as destroyed. Since documentation noting the date of receipt at DHHS is not maintained, OSA was unable to verify the security of the EBT card during the extended periods of inactivity. OSA selected a non-statistical random sample. Additional analytical procedures identified: ? two returned EBT cards which were included on both spreadsheets. Additional audit procedures identified that these cards should have been logged as retransmitted. ? three returned EBT cards which were processed utilizing inaccurate client information. Multiple client names were tied to the same client identification number. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. The Department processed 2,200 returned EBT cards; 790 were recorded as retransmitted and 1,410 were recorded as destroyed. Cause: ? Lack of policies and procedures relating to the security of returned EBT cards ? Lack of segregation of duties Effect: Potential unauthorized use of EBT cards Recommendation: We recommend that the Department implement procedures to maintain adequate security over returned EBT cards, including proper segregation of duties within the process. Corrective Action Plan: See F-13 Management?s Response: The Department agrees with this finding. The Department acknowledges the need to implement a revised SOP governing returned card processing. The revised SOP will include clear segregation of duties to include enhanced management oversight by and between personnel involved. The Department disagrees that adequate security controls are not maintained. Undeliverable EBT cards are delivered to a regional office each business day, and those cards are worked the day they are received. They are placed in the mailbox of a clerical resource that works in the office. The mailbox is located in an area restricted to those that have badge access. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The State is required by Federal regulations to maintain minimum security procedures for EBT cards that include secure storage and limited access. An unsecured mailbox in a location accessible to numerous employees not authorized to handle returned EBT cards is not secure storage or limited access. In addition, because documentation noting the date of receipt of returned EBT cards at DHHS is not maintained, OSA is unable to verify that cards are processed on the date of receipt. The finding remains as stated. (State Number: 22-1108-02)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-014) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0907-01)
(2022-021) Title: Internal control over valuing estimates for the allowances for uncollectible unemployment insurance receivables needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor (MDOL) Administrative and Financial Services (DAFS) State Bureau: Unemployment Compensation, a Unit of MDOL Security and Employment Service Center, a Unit of DAFS Office of the State Controller, a Unit of DAFS Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547; State Administrative and Accounting Manual, Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Agencies are required by statute to prepare, submit, and retain auditable supporting documentation for all information submitted to the Office of the State Controller (OSC) for financial reporting purposes. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Accounting estimates used in the financial statements require the use of judgment by management which should be based on actual knowledge and experience with historical and current data. Annual review of these estimates and the circumstances that give rise to the estimates is necessary. Condition: The Maine Department of Labor (MDOL) utilizes the outsourced ReEmployME information system for processing and storage of data related to the Unemployment Insurance (UI) program. ReEmployME stores extensive financial and programmatic data, including records of balances owed to the State by individuals and employers. Detailed reports of receivables balances are necessary for financial reporting purposes. MDOL cannot provide an accounts receivable report from ReEmployME containing records for each debtor as of June 30, 2022. The related valuations of the allowances for uncollectible UI receivables reported on the State?s financial statements are not supported. The estimated allowances for uncollectible accounts related to Federal and State benefit overpayment receivables, unemployment tax receivables, and UI penalties and interest receivables are all based on the same assumption. Receivables outstanding for more than one year are automatically deemed uncollectible, rather than applying assumptions supported by data and evidence for each classification of receivables. OSC?s review and analysis of the estimated allowances is not sufficient. The supporting documentation for this analysis does not include management?s considerations of historical data, detailed collections activity, or current economic trends. The Office of the State Auditor (OSA) performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables is reasonable. OSA?s analysis found that collection activity did not support OSC?s allowance. As a result, an audit adjustment was proposed to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million. OSC did not record this proposed audit adjustment. Context: UI receivables for the Employment Security Trust Fund (ESTF) totaled $112.5 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $63.2 million. This results in management?s presentation of $49.3 million in net ESTF UI receivables, not including interest and penalties. Federal Fund UI receivables totaled $56.9 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $10.2 million. This results in management?s presentation of $46.7 million in net Federal UI receivables. As of June 30, 2022, a receivable for interest and penalties related to UI totaling $61.8 million was included in the Other Special Revenue Fund, reduced by the estimated allowance for uncollectible accounts of $59 million. The allowance represents 95.5% of the total balance, and results in management?s net presentation of approximately $2.8 million in UI receivables for interest and penalties. Cause: ? Management has identified long-term and ongoing information system limitations that have not been resolved which inhibit functionality for receivables reporting. ? Lack of documented effective policies and procedures to: o generate and retain detailed UI receivables information for financial reporting purposes; and o support management?s considerations in developing the estimated allowances for uncollectible accounts. ? Lack of supervisory oversight Effect: ? Potential misstatement of ESTF UI receivables balances, the allowances for uncollectible accounts which are also separately disclosed in Note 6 of the financial statements, and the resulting net receivables balances. ? Federal Fund receivables are overstated by an estimated $44.4 million in the financial statements, and the allowance for uncollectible accounts separately disclosed in Note 6 of the financial statements is understated by an estimated $44.4 million. Recommendation: We recommend that MDOL and the Security and Employment Service Center generate and retain detailed receivables reports, including collections activity, throughout the fiscal year for proper financial reporting of receivables balances. The reports should also be utilized to establish a formal, documented method to estimate the allowances for uncollectible accounts. The methodology should incorporate current and historical collection experience and other factors used to support professional judgment. MDOL personnel should perform a detailed secondary review of the methodology and calculated estimates for the allowances for uncollectible accounts. In addition, we recommend that OSC request and analyze detailed collection data from MDOL as part of their review of the estimated allowances to reduce the risk of management bias and to prove the allowances are reasonable, complete, and accurate. Corrective Action Plan: See F-11 Management?s Response: The Departments agree that detailed receivables reports should be generated and retained during the fiscal year. The OSC will provide guidance to the Department of Labor (DOL) to develop a reporting mechanism that will provide a more detailed analysis of the activity of the receivable balances. The OSC is responsible for determining the estimates in the financial statements. The accounting estimates are based on subjective, as well as, objective factors; therefore, professional judgement is required to estimate an amount for uncollectible receivables using an aging methodology, which is considered a common and acceptable method within the industry. Management's opinion is that this method is not overly sensitive to variations, is consistent with historical patterns and is not overly subjective or susceptible to bias. Applying this methodology, the OSC and the DOL accumulate relevant, sufficient, and reliable data on which to base the estimate. Additionally, we believe that the estimate is presented in conformity with the applicable accounting principles and that disclosure is adequate. The OSC recently performed a five-year trend analysis of historical collections with information provided by the DOL. The OSC compared the percentages and the assumptions used in the past and updated the reserve percentages accordingly. The OSC will continue to use the rolling year trend analysis with the actual collection data, as provided by the DOL, to update the reserve percentage. The DOL implemented a new system and the OSC will continue to review the reserve process to ensure the allowance continues to be valued properly. Contact: Stacey Thomas, Financial Management Coordinator, OSC, 207-626-8431 Auditor?s Concluding Remarks: OSA performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables was reasonable. This analysis resulted in a proposed audit adjustment to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million; therefore, OSC?s methodology for determining the allowance is not reasonable and additional considerations, such as collections data, need to be made. We continue to recommend that MDOL and OSC work together to improve financial reporting to ensure that the State?s financial statements are reasonable, complete, and accurate. The finding remains as stated. (State Number: 22-0308-01)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-014) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0907-01)
(2022-021) Title: Internal control over valuing estimates for the allowances for uncollectible unemployment insurance receivables needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor (MDOL) Administrative and Financial Services (DAFS) State Bureau: Unemployment Compensation, a Unit of MDOL Security and Employment Service Center, a Unit of DAFS Office of the State Controller, a Unit of DAFS Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547; State Administrative and Accounting Manual, Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Agencies are required by statute to prepare, submit, and retain auditable supporting documentation for all information submitted to the Office of the State Controller (OSC) for financial reporting purposes. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Accounting estimates used in the financial statements require the use of judgment by management which should be based on actual knowledge and experience with historical and current data. Annual review of these estimates and the circumstances that give rise to the estimates is necessary. Condition: The Maine Department of Labor (MDOL) utilizes the outsourced ReEmployME information system for processing and storage of data related to the Unemployment Insurance (UI) program. ReEmployME stores extensive financial and programmatic data, including records of balances owed to the State by individuals and employers. Detailed reports of receivables balances are necessary for financial reporting purposes. MDOL cannot provide an accounts receivable report from ReEmployME containing records for each debtor as of June 30, 2022. The related valuations of the allowances for uncollectible UI receivables reported on the State?s financial statements are not supported. The estimated allowances for uncollectible accounts related to Federal and State benefit overpayment receivables, unemployment tax receivables, and UI penalties and interest receivables are all based on the same assumption. Receivables outstanding for more than one year are automatically deemed uncollectible, rather than applying assumptions supported by data and evidence for each classification of receivables. OSC?s review and analysis of the estimated allowances is not sufficient. The supporting documentation for this analysis does not include management?s considerations of historical data, detailed collections activity, or current economic trends. The Office of the State Auditor (OSA) performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables is reasonable. OSA?s analysis found that collection activity did not support OSC?s allowance. As a result, an audit adjustment was proposed to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million. OSC did not record this proposed audit adjustment. Context: UI receivables for the Employment Security Trust Fund (ESTF) totaled $112.5 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $63.2 million. This results in management?s presentation of $49.3 million in net ESTF UI receivables, not including interest and penalties. Federal Fund UI receivables totaled $56.9 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $10.2 million. This results in management?s presentation of $46.7 million in net Federal UI receivables. As of June 30, 2022, a receivable for interest and penalties related to UI totaling $61.8 million was included in the Other Special Revenue Fund, reduced by the estimated allowance for uncollectible accounts of $59 million. The allowance represents 95.5% of the total balance, and results in management?s net presentation of approximately $2.8 million in UI receivables for interest and penalties. Cause: ? Management has identified long-term and ongoing information system limitations that have not been resolved which inhibit functionality for receivables reporting. ? Lack of documented effective policies and procedures to: o generate and retain detailed UI receivables information for financial reporting purposes; and o support management?s considerations in developing the estimated allowances for uncollectible accounts. ? Lack of supervisory oversight Effect: ? Potential misstatement of ESTF UI receivables balances, the allowances for uncollectible accounts which are also separately disclosed in Note 6 of the financial statements, and the resulting net receivables balances. ? Federal Fund receivables are overstated by an estimated $44.4 million in the financial statements, and the allowance for uncollectible accounts separately disclosed in Note 6 of the financial statements is understated by an estimated $44.4 million. Recommendation: We recommend that MDOL and the Security and Employment Service Center generate and retain detailed receivables reports, including collections activity, throughout the fiscal year for proper financial reporting of receivables balances. The reports should also be utilized to establish a formal, documented method to estimate the allowances for uncollectible accounts. The methodology should incorporate current and historical collection experience and other factors used to support professional judgment. MDOL personnel should perform a detailed secondary review of the methodology and calculated estimates for the allowances for uncollectible accounts. In addition, we recommend that OSC request and analyze detailed collection data from MDOL as part of their review of the estimated allowances to reduce the risk of management bias and to prove the allowances are reasonable, complete, and accurate. Corrective Action Plan: See F-11 Management?s Response: The Departments agree that detailed receivables reports should be generated and retained during the fiscal year. The OSC will provide guidance to the Department of Labor (DOL) to develop a reporting mechanism that will provide a more detailed analysis of the activity of the receivable balances. The OSC is responsible for determining the estimates in the financial statements. The accounting estimates are based on subjective, as well as, objective factors; therefore, professional judgement is required to estimate an amount for uncollectible receivables using an aging methodology, which is considered a common and acceptable method within the industry. Management's opinion is that this method is not overly sensitive to variations, is consistent with historical patterns and is not overly subjective or susceptible to bias. Applying this methodology, the OSC and the DOL accumulate relevant, sufficient, and reliable data on which to base the estimate. Additionally, we believe that the estimate is presented in conformity with the applicable accounting principles and that disclosure is adequate. The OSC recently performed a five-year trend analysis of historical collections with information provided by the DOL. The OSC compared the percentages and the assumptions used in the past and updated the reserve percentages accordingly. The OSC will continue to use the rolling year trend analysis with the actual collection data, as provided by the DOL, to update the reserve percentage. The DOL implemented a new system and the OSC will continue to review the reserve process to ensure the allowance continues to be valued properly. Contact: Stacey Thomas, Financial Management Coordinator, OSC, 207-626-8431 Auditor?s Concluding Remarks: OSA performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables was reasonable. This analysis resulted in a proposed audit adjustment to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million; therefore, OSC?s methodology for determining the allowance is not reasonable and additional considerations, such as collections data, need to be made. We continue to recommend that MDOL and OSC work together to improve financial reporting to ensure that the State?s financial statements are reasonable, complete, and accurate. The finding remains as stated. (State Number: 22-0308-01)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-048) Title: Internal control over ERA Program special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Economic and Community Development State Bureau: Commissioner?s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Emergency Rental Assistance Program (COVID-19) Assistance Listing Number: 21.023 Federal Award Identification Number: ERA0299, ERA0434, ERAE0515, ERAE0563 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report its first-tier subaward under the Emergency Rental Assistance (ERA) Program in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report a first-tier subaward totaling $152 million to the only subrecipient of the ERA Program. First-tier subawards account for 100 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the ERA Program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional policies and procedures, including increased supervisory oversight, to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-19 Management?s Response: The Department agrees with this finding. Due to the evolving reporting requirements for the Emergency Rental Assistance program, the Department did not originally identify the FFATA requirements as applicable and did not submit accordingly. Currently, the existing policies and procedures have been modified to ensure that from this point forward, FFATA reporting is completed for all subawards that meet or exceed the first-tier threshold. Contact: Deborah Johnson, Director, Office of Community Development, DECD, 207-624-9817 (State Number: 22-1695-01)
(2022-049) Title: Internal control over ERA Program subrecipient monitoring needs improvement Prior Year Findings: None State Department: Economic and Community Development State Bureau: Commissioner?s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Emergency Rental Assistance Program (COVID-19) Assistance Listing Number: 21.023 Federal Award Identification Number: ERA0299, ERA0434, ERAE0515, ERAE0563 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: In fiscal year 2022, the Department passed through Emergency Rental Assistance (ERA) Program funds to one subrecipient. Subrecipient monitoring procedures included providing Federal award information in grant award agreements and frequent communication with the subrecipient; however, the Department: ? did not adequately design and document ongoing monitoring activities to ensure that the subaward was used for authorized purposes and in compliance with Federal regulations. ? could not provide a documented review of the subrecipient?s audit report to verify compliance with Subpart F of 2 CFR 200 and to ensure that the subrecipient took timely and appropriate action on all deficiencies pertaining to the Department?s subaward. The Office of the State Auditor reviewed the subrecipient?s audit report covering a portion of fiscal year 2022 and noted findings related to the subaward that should have been considered in relation to the risk of subrecipient noncompliance and planned monitoring procedures. ? did not require submission of detailed expenditure information with the subrecipient?s requests for reimbursement of ERA Program funds. A summary spreadsheet outlining actual and projected expenditures for second-tier subrecipients was the only support provided to the Department with each reimbursement request. Context: The Department provided $245.8 million to the ERA subrecipient during fiscal year 2022. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: ? Noncompliance with Federal regulations ? Lack of ongoing subrecipient monitoring procedures could result in subrecipient noncompliance. Recommendation: We recommend that the Department develop and implement additional policies and procedures to require: ? ongoing subrecipient monitoring during the use of the subaward; ? receipt and documented review of subrecipient audits in order to consider the effects of audit results on subrecipient risk assessment and planned monitoring procedures; and ? receipt of detailed documentation in support of subrecipient reimbursement requests prior to payment approval. Corrective Action Plan: See F-19 Management?s Response: The Department agrees with this finding. Due to the Emergency Rental Assistance Program coming to a close, the Department plans on utilizing a consultant to assist with close out procedures that will ensure these subrecipient funds were used for authorized purposes and in compliance with Federal regulations. Additionally, the Department will ensure that the review of subrecipient audit reports are sufficiently documented. Contact: Deborah Johnson, Director, Office of Community Development, DECD, 207-624-9817 (State Number: 22-1695-02)
(2022-050) Title: Internal control over ERA Program reporting needs improvement Prior Year Findings: None State Department: Economic and Community Development State Bureau: Commissioner?s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Emergency Rental Assistance Program (COVID-19) Assistance Listing Number: 21.023 Federal Award Identification Number: ERA0299, ERA0434, ERAE0515, ERAE0563 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; Consolidated Appropriations Act, 2021, Section 501(g) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must report the total number of participating households receiving Emergency Rental Assistance (ERA) of any kind and the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households on a monthly basis. Additionally, the Department must submit quarterly reports providing financial and performance data regarding grantee administration of their ERA projects and capture program design in addition to program status data elements. Condition: The Department contracts with a subrecipient to administer the ERA Program. A Memorandum of Understanding (MOU) between the Department and the subrecipient outlines the following: ? The subrecipient is responsible for preparation of all required reporting under the ERA Program. ? The Department is responsible for certification and submission of all reports prepared by the subrecipient. The Office of the State Auditor (OSA) reviewed ERA Program reporting and found that the subrecipient prepared, certified, and submitted 24 monthly and 9 quarterly performance reports during fiscal year 2022. The Department did not review, approve, or certify any of the fiscal year 2022 reports prior to submission to the Federal government. The reports were only provided to the Department subsequent to submission. The Department provided OSA with all monthly and quarterly reports for the fiscal year; however, the Department was unable to provide: ? documentation to support amounts reported on the State?s fiscal year 2022 ERA Program performance reports. ? documentation of review and approval of performance reports prepared by the subrecipient, as they were prepared, certified, and submitted with no oversight by the Department. The Department has no assurance that the ERA Program information prepared by the subrecipient and submitted to the Federal government on behalf of the State is accurate or properly supported. Context: In fiscal year 2022, the Department provided $245.8 million to the ERA subrecipient. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: The Department did not properly oversee the ERA Program as required by Federal regulations. ERA Program reports submitted to the Federal government are not properly supported and may not be accurate as documentation is not reviewed or maintained by the Department. Recommendation: We recommend that the Department implement additional policies and procedures to require a documented review and approval of all ERA Program reports prepared by the subrecipient prior to Department certification and submission. This will ensure that information reported to the Federal government is accurate and complete. Corrective Action Plan: See F-19 Management?s Response: The Department agrees with this finding. The Department will document the review and approval of all ERA program reports prepared by the subrecipient prior to Department certification and submission. Contact: Deborah Johnson, Director, Office of Community Development, DECD, 207-624-9817 (State Number: 22-1695-03)
(2022-051) Title: Internal control over CSLFRF expenditures needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: SLFRP0144 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $51,482,644 Likely Questioned Costs: $51,482,644 Criteria: 2 CFR 200.303; 2 CFR 200.403; 2 CFR 200.302; Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Interim Final Rule, Federal Register Volume 86, Issue 93 (May 17, 2021) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?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 determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The CSLFRF Interim Final Rule states that recipients may make deposits into the State account of the Unemployment Trust Fund up to the level needed to restore the pre-pandemic balances of such account as of January 27, 2020, or to pay back advances received for the payment of benefits between January 27, 2020, and May 17, 2021, given the close nexus between Unemployment Trust Fund costs, solvency of Unemployment Trust Fund systems, and pandemic economic impacts. Condition: As part of the American Rescue Plan Act, the State was advanced $997 million in Federal CSLFRF to support its response to and recovery from the COVID-19 public health emergency. In response, Public Law 2021, Chapter 483, Section D-1 was enacted and states that ?notwithstanding any provision of law to the contrary, the State Controller shall transfer $80 million from the Federal Expenditures Fund ? ARP State Fiscal Recovery balance to the Department of Labor, Unemployment Compensation Fund no later than November 30, 2021.? To support the allowability of the $80 million transfer under the Public Health and Economic Impacts use category, the Maine Department of Labor (MDOL) prepared an analysis that compared the balance between January 25, 2020 ($502,137,397) and September 30, 2021 ($405,167,938). Under this use category, transfers to the Unemployment Trust Fund are only allowable up to the level needed to restore the Trust Fund to the pre-pandemic balance as of January 27, 2020. The Department of Administrative and Financial Services (DAFS) reviewed and approved the calculation for reasonableness and allowability. As a result, DAFS transferred $80 million from the Federal Fund to the State Unemployment Trust Fund on November 30, 2021. Using the State?s Trust Fund Balance Reports, the Office of the State Auditor (OSA) compared the January 27, 2020, balance ($499,966,386) to the September 30, 2021, balance ($471,449,030). The $28,517,356 difference represents the amount allowed to restore the State Unemployment Trust Fund to the pre-pandemic balance as of January 27, 2020, under the Public Health and Economic Impacts use category. MDOL and DAFS were unable to provide: ? documentation supporting the $405.2 million balance on September 30, 2021, used to substantiate allowability of the $80 million transfer, and ? a justification of why the Trust Fund Balance Reports were not used in the calculation. Therefore, the $80 million transfer exceeds the amount needed to restore the State Unemployment Trust Fund to the pre-pandemic balance by $51,482,644 under the Public Health and Economic Impacts use category. Context: The $80 million transfer to the State?s Unemployment Trust Fund represents approximately 66 percent of the $121.5 million in CSLFRF expenditures during fiscal year 2022. Cause: Misinterpretation of Federal guidance Effect: ? Noncompliance with Federal regulations ? Known questioned costs and potential disallowances Recommendation: We recommend that MDOL and DAFS review expenditures charged to CSLFRF, including the above-noted expenditure, to ensure that costs are adequately documented to support that only allowable costs are funded by CSLFRF. Corrective Action Plan: See F-19 Management?s Response: We disagree with this finding. Likewise, we are unable to determine why the auditor has identified a questioned cost or includes a recommendation that only allowable costs are funded by CSLFRF. The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category. Questioned costs are defined by the Uniform Guidance, 2CFR ? 200.1, Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; In this case, there was no violation of statute, regulation or terms of the federal award for the SLFRF program (ALN 21.027). Regardless of category, the transfer of $80M to the UI Trust is considered an allowable cost under the program; thus, there is no portion of the transfer that is considered unallowable and no basis for a questioned cost. (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or All parties agree that the transfer is allowable under the SLFRF program (ALN 21.027) and adequate documentation has been provided to support that determination. (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. All parties agree that the cost appears reasonable; consequently, there is no amount that should be questioned. All documentation to support the allowability of this transfer was provided to the auditor for review. There were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category; however, we provided documentation to support that the total amount was eligible under the Revenue Loss - Provision of Government Services use category. Although we have identified a weakness in internal control over compliance, there was no actual noncompliance. Consequently, there is no cost that is considered unallowable; therefore, there should be no questioned cost. DOL Contact: Kimberly Smith, Deputy Commissioner, DOL, 207-621-5096 DAFS Contact: Frank Wiltuck, Director of Internal Audit, OSC, 207-626-8420 Auditor?s Concluding Remarks: Management asserts, ?The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category.? However, OSC did not provide documentation to support this statement, as described below. OSA initially questioned the allowability of the $80 million transfer in November 2022. In the following months and in response to OSA?s request for all documentation to corroborate the allowability of the transfer, OSC only provided evidence to support the transfer under the CSLFRF Public Health and Economic Impacts use category. OSA reviewed this support and identified errors in the calculation for the allowable amount of the transfer under the CSLFRF Public Health and Economic Impacts use category. As a result of these errors, OSA notified the Department that a finding would be issued and costs of $51,482,644 would be questioned. In response to the finding communication from OSA, OSC initiated discussion of alternative use categories for CSLFRF under which the transferred amount would be considered allowable. OSC proposed recategorizing the unallowable portion of the transfer from the Public Health and Economic Impacts use category to the Provision of Government Services use category of CSLFRF. Though the unallowable portion of the transfer (the questioned costs) may ultimately be allowable under this alternative use category, the costs, at the time of the audit, were incurred under the Public Health and Economic Impacts use category. Management states, ?we are unable to determine why the auditor has identified a questioned cost? and has provided the definition of Questioned Costs as defined by 2 CFR 200.1. However, OSC?s interpretation implies that OSA should allow changes in supporting documentation that do not align with the original intent of the usage of funds. The recategorization of the unallowable costs to another use category may be part of OSC?s corrective action plan; however, the documentation provided as audit evidence does not properly support $51,482,644 in CSLFRF Public Health and Economic Impacts costs. OSA cannot allow the Department to alter supporting documentation to avoid questioned costs. If OSA permitted the State to alter supporting documentation whenever OSA identified unallowable costs, there would never be any questioned costs to report. This is not the intent of 2 CFR 200.1. Managements acknowledges ?there were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category? and ?we have identified a weakness in internal control over compliance,? which is the basis of this finding. The finding remains as stated. (State Number: 22-1699-01)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-057) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: ? a description and identification number; ? the source of funding, including the Federal Award Identification Number; ? who holds title and the acquisition date; ? the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; ? the location, use and condition; and ? any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned equipment purchases. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for equipment purchases identified and approved in the application. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. During fiscal year 2022, the Department did not have policies and procedures in place to track SAU equipment purchases reimbursed with ESF; therefore, the Department does not have assurance that: ? a complete and accurate record of all equipment purchased with ESF funds was maintained by each SAU. ? proper monitoring activities surrounding subrecipient compliance with Federal regulations for equipment and real property management were conducted. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be in compliance with equipment and real property management requirements. ? Assets purchased with ESF funds may not be properly safeguarded or maintained. Recommendation: We recommend that the Department implement policies and procedures to ensure that a complete and accurate record of all equipment purchased under ESF is maintained by the Department and by each SAU. This record should be utilized during subrecipient monitoring activities to verify subrecipient compliance with Federal regulations. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. The Office of Federal Emergency Relief Programs will develop and implement policies and procedures so that complete and accurate records of all equipment purchased under ESF will be maintained by each SAU and the Department when collected during subrecipient monitoring. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 (State Number: 22-1235-06)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-057) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: ? a description and identification number; ? the source of funding, including the Federal Award Identification Number; ? who holds title and the acquisition date; ? the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; ? the location, use and condition; and ? any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned equipment purchases. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for equipment purchases identified and approved in the application. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. During fiscal year 2022, the Department did not have policies and procedures in place to track SAU equipment purchases reimbursed with ESF; therefore, the Department does not have assurance that: ? a complete and accurate record of all equipment purchased with ESF funds was maintained by each SAU. ? proper monitoring activities surrounding subrecipient compliance with Federal regulations for equipment and real property management were conducted. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be in compliance with equipment and real property management requirements. ? Assets purchased with ESF funds may not be properly safeguarded or maintained. Recommendation: We recommend that the Department implement policies and procedures to ensure that a complete and accurate record of all equipment purchased under ESF is maintained by the Department and by each SAU. This record should be utilized during subrecipient monitoring activities to verify subrecipient compliance with Federal regulations. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. The Office of Federal Emergency Relief Programs will develop and implement policies and procedures so that complete and accurate records of all equipment purchased under ESF will be maintained by each SAU and the Department when collected during subrecipient monitoring. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 (State Number: 22-1235-06)
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-056) Title: Internal control over ESF special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System (FSRS). In the Office of the State Auditor?s (OSA) test of 36 subawards that exceeded the first-tier subaward threshold, the following FFATA reporting exceptions were identified: ? One subaward listed an incorrect project description; and ? One subaward totaling $683,794 was incorrectly reported for Education in the Unorganized Territories (EUT). This is not a subrecipient award as the EUT is governed by the State. In addition, the Department could not provide evidence that a secondary review of FFATA reports occurred prior to submission in the FSRS to ensure that information entered was accurate and complete. The Department implemented a secondary review process in February 2022; however, this was not in place when ESF subawards were reported in September and October 2021. OSA selected a non-statistical random sample. Context: During fiscal year 2022, the Department obligated $371 million in first-tier subawards to 177 subrecipients of ESF. All 177 subrecipients had awards that exceeded the first-tier subaward threshold for reporting in the FSRS. Cause: ? Lack of supervisory review ? Lack of policies and procedures prior to February 2022 Effect: Inaccurate, incomplete, or untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department maintain policies and procedures to ensure all subawards that meet or exceed the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Documentation of supervisory review for each FFATA report submitted in the FSRS should be retained as required by policies and procedures established in February 2022. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. Beginning in February 2022, the Department implemented a procedure for reviewing FFATA reports for accuracy prior to submission. Where this finding relates to FFATA reports prior to February 2022, and the Department has taken steps to address the previous finding, management feels that no further corrective action is necessary. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1235-02)
(2022-057) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: ? a description and identification number; ? the source of funding, including the Federal Award Identification Number; ? who holds title and the acquisition date; ? the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; ? the location, use and condition; and ? any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned equipment purchases. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for equipment purchases identified and approved in the application. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. During fiscal year 2022, the Department did not have policies and procedures in place to track SAU equipment purchases reimbursed with ESF; therefore, the Department does not have assurance that: ? a complete and accurate record of all equipment purchased with ESF funds was maintained by each SAU. ? proper monitoring activities surrounding subrecipient compliance with Federal regulations for equipment and real property management were conducted. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be in compliance with equipment and real property management requirements. ? Assets purchased with ESF funds may not be properly safeguarded or maintained. Recommendation: We recommend that the Department implement policies and procedures to ensure that a complete and accurate record of all equipment purchased under ESF is maintained by the Department and by each SAU. This record should be utilized during subrecipient monitoring activities to verify subrecipient compliance with Federal regulations. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. The Office of Federal Emergency Relief Programs will develop and implement policies and procedures so that complete and accurate records of all equipment purchased under ESF will be maintained by each SAU and the Department when collected during subrecipient monitoring. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 (State Number: 22-1235-06)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-058) Title: Internal control over ICA program subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must: ? include Federal award information in the subaward that enables subrecipients to identify the source of the Federal award, as well as certain subrecipient information. ? evaluate each subrecipient?s risk of noncompliance with Federal regulations for the purposes of determining the appropriate level of subrecipient monitoring to be performed. ? monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Department is responsible for ensuring subrecipients comply with Federal requirements by: ? reviewing subrecipient grant awards to ensure accurate Federal award identification information is included to allow subrecipients to accurately identify the source of the subawards; ? utilizing risk evaluations to determine the appropriate level of monitoring activities to be performed that correspond to the results of those risk evaluations; and ? performing ongoing monitoring activities to ensure that the subaward was used for authorized purposes and in compliance with Federal regulations. The Office of the State Auditor (OSA) tested compliance with subrecipient monitoring requirements for 7 subrecipients and found that: ? 3 subawards did not properly identify required Federal award information: o 2 subawards were missing the subrecipient?s Data Universal Numbering System (DUNS) number. o 2 subawards reported the wrong Assistance Listing Number. ? 2 subrecipients were deemed ?higher risk? after the Department performed a risk evaluation; however, the Department could not provide documentation to support that additional monitoring activities were performed in response to the ?higher risk? designation. ? 80 performance reports were required to be completed and submitted for fiscal year 2022 to ensure subaward performance goals are achieved. o 47 reports were provided to the auditor but lacked evidence of supervisory review. o 33 reports could not be provided. ? 52 financial reports were required to be completed and submitted for fiscal year 2022 to ensure subawards are used for approved budgeted expenditures. o 32 reports were provided to the auditor but lacked evidence of supervisory review. o 20 reports could not be provided. The Department could not provide any further documentation to support subrecipient monitoring procedures occurred during fiscal year 2022 to ensure that the subaward was used for authorized purposes. OSA selected a non-statistical random sample. Context: The Department provided $2.5 million to 35 Immunization Cooperative Agreements (ICA) program subrecipients in fiscal year 2022. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Lack of ongoing subrecipient monitoring procedures could result in undetected subrecipient noncompliance. Recommendation: We recommend that the Department implement policies and procedures to ensure that: ? subaward agreements include all required information and are accurate; ? risk evaluations are utilized to determine the appropriate level of monitoring activities to be performed; and ? ongoing subrecipient monitoring is completed during the subaward and documented. This will ensure that the Department is in compliance with subrecipient monitoring requirements. Corrective Action Plan: See F-22 Management?s Response: The Department agrees with this finding. The Department initiated these subrecipient agreements to ensure equitable access to COVID-19 vaccines. As a result of these agreements, Maine had one of the best vaccine roll-outs in the country, including among Black, Indigenous, and People of Color. Some of the information requested by OSA was unable to be accessed because it was saved in individual staff files which were moved when an employee was transferred or left employment with the Department. The Department will implement processes in SFY23 to improve record keeping for these subawards including: 1) reviewing subaward agreements using a checklist to ensure they include all the required information and are accurate; 2) ensuring that risk evaluations are utilized to determine the appropriate level of monitoring; and 3) improving and centralizing subrecipient monitoring documentation within the Office of Population Health Equity (OPHE) at Maine CDC. Contact: Ian Yaffe, Director, Office of Population Health Equity, DHHS, 207- 592-1481 (State Number: 22-1118-03)
(2022-059) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-22 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-02)
(2022-060) Title: Internal control over the submission of ICA Schedule of Expenditures of Federal Awards reporting needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Immunization Cooperative Agreements (ICA) program. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal ICA expenditures to OSC which included noncash vaccine awards; however, the summary included the wrong fiscal year?s noncash vaccine award data. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. As a result, ICA expenditures were inaccurately reported on the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: In fiscal year 2022, noncash flu vaccines totaling $169,070 were not reported to OSC by the Department for inclusion in the SEFA. Cause: Lack of adequate internal control relating to Department SEFA submissions to OSC Effect: ? Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. ? Inaccurate information was reported in the fiscal year 2022 Annual Comprehensive Financial Report. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-22 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, when the request is sent from the Financial Service Center to the MIP Senior Health Program Manager (SHPM), the SHPM will request the information from the MIP Planning and Research Associate. The SHPM will be required to review the requested data prior to the response, which will include fiscal year accuracy of the reports. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to CDC?s Immunization program for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with CDC?s Immunization?s program to verify that the information provided was accurate. This will be completed by 12/31/2023. Contact: Jessica Shiminski, Health Program Manager, Maine Center for Disease Control & Prevention, DHHS, 207-287-7087 (State Number: 22-1118-01)
(2022-061) Title: Internal control over ICA program cash management needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services Service Center (DHHS SC) is responsible for the drawdown of funds for the Immunization Cooperative Agreements (ICA) program. The DHHS SC requests Federal funds in order to reimburse ICA program expenditures. In December 2021, $478,459 of program expenditures that had previously been reimbursed under the ICA program were recategorized as eligible Coronavirus Relief Fund expenditures. The DHHS SC did not immediately return the funds that were received for these expenditures and continued to draw additional Federal funds under the ICA grant. As a result, the State?s Federal cash balances for the ICA program exceeded the State?s administratively feasible threshold of seven business days for approximately seven months. Context: In fiscal year 2022, there were approximately 160 Federal grant drawdowns totaling $8.7 million for the ICA program. Cause: ? Lack of adequate procedures to capture all program activity ? Lack of supervisory oversight Effect: The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC develop and implement policies and procedures to address identification and timely return of excess grant funds to the Federal government. Corrective Action Plan: See F-23 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. The grant daily files will be reconciled for the Immunization grants from 2021 through current by December 31, 2023 in order to timely identify and return excess grant funds. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1118-02)
(2022-062) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-23 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-01)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-058) Title: Internal control over ICA program subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must: ? include Federal award information in the subaward that enables subrecipients to identify the source of the Federal award, as well as certain subrecipient information. ? evaluate each subrecipient?s risk of noncompliance with Federal regulations for the purposes of determining the appropriate level of subrecipient monitoring to be performed. ? monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Department is responsible for ensuring subrecipients comply with Federal requirements by: ? reviewing subrecipient grant awards to ensure accurate Federal award identification information is included to allow subrecipients to accurately identify the source of the subawards; ? utilizing risk evaluations to determine the appropriate level of monitoring activities to be performed that correspond to the results of those risk evaluations; and ? performing ongoing monitoring activities to ensure that the subaward was used for authorized purposes and in compliance with Federal regulations. The Office of the State Auditor (OSA) tested compliance with subrecipient monitoring requirements for 7 subrecipients and found that: ? 3 subawards did not properly identify required Federal award information: o 2 subawards were missing the subrecipient?s Data Universal Numbering System (DUNS) number. o 2 subawards reported the wrong Assistance Listing Number. ? 2 subrecipients were deemed ?higher risk? after the Department performed a risk evaluation; however, the Department could not provide documentation to support that additional monitoring activities were performed in response to the ?higher risk? designation. ? 80 performance reports were required to be completed and submitted for fiscal year 2022 to ensure subaward performance goals are achieved. o 47 reports were provided to the auditor but lacked evidence of supervisory review. o 33 reports could not be provided. ? 52 financial reports were required to be completed and submitted for fiscal year 2022 to ensure subawards are used for approved budgeted expenditures. o 32 reports were provided to the auditor but lacked evidence of supervisory review. o 20 reports could not be provided. The Department could not provide any further documentation to support subrecipient monitoring procedures occurred during fiscal year 2022 to ensure that the subaward was used for authorized purposes. OSA selected a non-statistical random sample. Context: The Department provided $2.5 million to 35 Immunization Cooperative Agreements (ICA) program subrecipients in fiscal year 2022. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Lack of ongoing subrecipient monitoring procedures could result in undetected subrecipient noncompliance. Recommendation: We recommend that the Department implement policies and procedures to ensure that: ? subaward agreements include all required information and are accurate; ? risk evaluations are utilized to determine the appropriate level of monitoring activities to be performed; and ? ongoing subrecipient monitoring is completed during the subaward and documented. This will ensure that the Department is in compliance with subrecipient monitoring requirements. Corrective Action Plan: See F-22 Management?s Response: The Department agrees with this finding. The Department initiated these subrecipient agreements to ensure equitable access to COVID-19 vaccines. As a result of these agreements, Maine had one of the best vaccine roll-outs in the country, including among Black, Indigenous, and People of Color. Some of the information requested by OSA was unable to be accessed because it was saved in individual staff files which were moved when an employee was transferred or left employment with the Department. The Department will implement processes in SFY23 to improve record keeping for these subawards including: 1) reviewing subaward agreements using a checklist to ensure they include all the required information and are accurate; 2) ensuring that risk evaluations are utilized to determine the appropriate level of monitoring; and 3) improving and centralizing subrecipient monitoring documentation within the Office of Population Health Equity (OPHE) at Maine CDC. Contact: Ian Yaffe, Director, Office of Population Health Equity, DHHS, 207- 592-1481 (State Number: 22-1118-03)
(2022-059) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-22 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-02)
(2022-060) Title: Internal control over the submission of ICA Schedule of Expenditures of Federal Awards reporting needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Immunization Cooperative Agreements (ICA) program. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal ICA expenditures to OSC which included noncash vaccine awards; however, the summary included the wrong fiscal year?s noncash vaccine award data. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. As a result, ICA expenditures were inaccurately reported on the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: In fiscal year 2022, noncash flu vaccines totaling $169,070 were not reported to OSC by the Department for inclusion in the SEFA. Cause: Lack of adequate internal control relating to Department SEFA submissions to OSC Effect: ? Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. ? Inaccurate information was reported in the fiscal year 2022 Annual Comprehensive Financial Report. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-22 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, when the request is sent from the Financial Service Center to the MIP Senior Health Program Manager (SHPM), the SHPM will request the information from the MIP Planning and Research Associate. The SHPM will be required to review the requested data prior to the response, which will include fiscal year accuracy of the reports. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to CDC?s Immunization program for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with CDC?s Immunization?s program to verify that the information provided was accurate. This will be completed by 12/31/2023. Contact: Jessica Shiminski, Health Program Manager, Maine Center for Disease Control & Prevention, DHHS, 207-287-7087 (State Number: 22-1118-01)
(2022-061) Title: Internal control over ICA program cash management needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services Service Center (DHHS SC) is responsible for the drawdown of funds for the Immunization Cooperative Agreements (ICA) program. The DHHS SC requests Federal funds in order to reimburse ICA program expenditures. In December 2021, $478,459 of program expenditures that had previously been reimbursed under the ICA program were recategorized as eligible Coronavirus Relief Fund expenditures. The DHHS SC did not immediately return the funds that were received for these expenditures and continued to draw additional Federal funds under the ICA grant. As a result, the State?s Federal cash balances for the ICA program exceeded the State?s administratively feasible threshold of seven business days for approximately seven months. Context: In fiscal year 2022, there were approximately 160 Federal grant drawdowns totaling $8.7 million for the ICA program. Cause: ? Lack of adequate procedures to capture all program activity ? Lack of supervisory oversight Effect: The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC develop and implement policies and procedures to address identification and timely return of excess grant funds to the Federal government. Corrective Action Plan: See F-23 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. The grant daily files will be reconciled for the Immunization grants from 2021 through current by December 31, 2023 in order to timely identify and return excess grant funds. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1118-02)
(2022-062) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-23 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-01)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-063) Title: Internal control over ELC program reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18115; Paycheck Protection Program and Health Care Enhancement Act of 2020 (PL 116-139); Coronavirus Response and Relief Supplemental Appropriations Act of 2020 (PL 116-260) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must ensure that every laboratory that performs or analyzes a test that is intended to detect or diagnose a possible case of COVID-19 reports the results from each test to the U.S. Department of Health and Human Services. Condition: During fiscal year 2022, the Maine Center for Disease Control & Prevention (MeCDC) was required to complete the following reports: ? Quarterly and annual performance reports for four separate Federal awards ? Quarterly special reports for jurisdictional testing and positive/negative test results MeCDC could not provide supporting documentation to verify the accuracy, completeness, and timeliness of the filed reports. In addition, all reports were filed without documentation of approval by a secondary person prior to submission. Context: During fiscal year 2022, 16 quarterly performance reports, four annual performance reports, and two quarterly special reports were required to be filed. Cause: ? Lack of adequate internal controls ? Lack of supervisory oversight ? Lack of staff resources due to a significant increase in workload Effect: ? Incorrect or incomplete data may be reported to the Federal government. ? Potential Federal noncompliance due to performance and special reports not filed timely Recommendation: We recommend that MeCDC implement a documented process over the completion, filing, review, and retention of performance and special reports. Corrective Action Plan: See F-23 Management?s Response: The Department agrees with this finding. The Division of Disease Surveillance, within the Maine Center of Disease Control and Prevention put into place a comprehensive process to ensure quarterly and annual performance reports and special reports are properly completed, reviewed, filed, and retained during the fall of 2022. In September 2022, the Division hired a Grants Manager who developed a report tracking system using Microsoft Project. The individuals completing the reports, now complete them in Microsoft Project and from there the Grant Manager reviews for completeness and uploads into the federal site. The Grants Manager sends an email to the Principal Investigator when reports are complete and have been submitted to the federal CDC. Contact: Sara Robinson, Senior Program Manager, MeCDC, DHHS, 207-287-4610 (State Number: 22-1156-01)
(2022-064) Title: Internal control over submission and review of ELC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Office of the State Controller Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. At the close of the fiscal year, the Department and its Service Center reported Federal expenditures of $45 million under the ELC program to OSC; however, current year expenditures actually totaled $59 million. This information was then used by OSC to compile and prepare the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, ELC expenditures were incorrect on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: The 2022 SEFA originally reported total expenditures under ELC totaling $45 million; however, this included $14 million of prior year ELC expenditures that were transferred out of current year SEFA totals to the Coronavirus Relief Fund, resulting in an understatement of fiscal year ELC expenditures. Cause: ? Lack of adequate internal control relating to SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department work with its Service Center to implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-23 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and the DHHS Financial Service Center agree with this finding. The Financial Service Center will work with OSC to develop and implement additional procedures related to reporting of prior period adjustments beginning with the SEFA that is for the State Fiscal Year 2023, by December 31, 2023. DHHS Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1156-02)
(2022-065) Title: Internal control over ELC program cash management needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services (DHHS) Service Center (SC) provides services including human resources, payroll, accounting, and finance to programs administered by DHHS, including the Epidemiology and Laboratory for Infectious Diseases (ELC) program. The DHHS SC requests Federal funds to reimburse ELC program expenditures utilizing a system report of expenditures. This report includes both expenditures that have been paid and expenditures that are pending payment. Expenditures that are pending payment can take a significant amount of time to process. In the Office of the State Auditor?s testing of 48 Federal drawdowns, four drawdowns of Federal funds for the ELC program were beyond the administratively feasible requirement for disbursement. Disbursements ranged from 8 to 63 days after the receipt of Federal funds. The Office of the State Auditor selected a non-statistical random sample. Context: In fiscal year 2022, there were 211 Federal grant draws for the ELC program totaling $43.7 million. The four draws beyond the administratively feasible requirement for disbursement totaled $5.9 million. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC review and revise current policies and include guidance for drawing Federal funds to exclude pending expenditures to ensure that Federal cash is requested based on immediate cash needs. Corrective Action Plan: See F-24 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. Due to the number of individual CDC COVID grants received, the volume of daily processes has increased. The DHHS Financial SC will work to obtain and/or increase estimated revenue within the COVID appropriations. With an approval of estimated revenue, expenses will process first, and federal cash will be drawn after, reducing the risk of CMIA as Federal cash will be instantly replenishing the account rather than waiting for invoices to process. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1156-05)
(2022-066) Title: Internal control over ELC program suspension and debarment needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 180.220 and .300; Division of Contract Management Policy The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. The Division of Contract Management (DCM) requires all subrecipients to register in the System of Award Management (SAM) prior to awarding Federal funds to a recipient. DCM?s policy also requires annual verification, review and documentation of suspension and debarment compliance obtained from the SAM website. This document is required to be retained for each subrecipient that administers the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) grant. Condition: The Department of Health and Human Services? DCM administers subrecipient contracts for the ELC program. Included in all contracts is a Debarment, Performance, and Non- Collusion Certification. Annually, contract administrators are responsible for verifying that entities are not suspended or debarred on the SAM website. The Office of the State Auditor (OSA) selected eight subrecipients for testing compliance with suspension and debarment regulations. DCM could not provide documented support that: ? review and verification procedures were completed for five of the eight subrecipients tested. ? one subrecipient was registered on the SAM website. As a result, compliance with suspension and debarment could not be verified. The Department paid $54,423 to the subrecipient. OSA selected a non-statistical random sample. Context: The Department provided $5.9 million to the 43 subrecipients that administered the ELC program during fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional procedures to ensure that verification of suspension and debarment procedures are performed, properly documented, and retained. This will ensure that the Department does not enter into an agreement with a suspended or debarred entity. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Uniform Guidance part 200.214 identifies that non-Federal entities are subject to the non-procurement debarment and suspension regulations in 2 CFR part 180. 2 CFR part 180 requires that ?when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.? The Department meets this requirement as part of the contracting process by collecting certifications from the Community Agencies stating that they are not suspended or debarred. Therefore, we are in compliance with the Federal requirements for Suspension and debarment. The intent of the Department?s policy to utilize the System for Award Management Exclusions (SAM) is to be an optional and additional assurance to the required collection of certifications that the next lower tier persons are not suspended or debarred. The SAM is utilized as time and resources permit and is not intended to replace the certifications. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: DCM established the following policies to ensure compliance with Federal regulations: ? Subrecipients must register with the SAM prior to receiving Federal funds. ? Annual verification that the subrecipient is not suspended or debarred must be completed by obtaining and retaining such information from the SAM website. ? A Debarment, Performance, and Non-Collusion Certification is included in the subrecipient contract. One subrecipient was not registered with the SAM and the Department could not provide documentation to support that verification was performed for five subrecipients. It is the responsibility of the Department to implement policies and procedures to ensure compliance with Federal regulations. The Department has established such policies and identified these policies as the control mechanism to ascertain that the Department does not contract subrecipients who are suspended or debarred. To attest that a policy is optional negates the effectiveness of the control mechanism. The Department did not follow its established policies; therefore, a failure in the control process exists. The finding remains as stated. (State Number: 22-1156-03)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-063) Title: Internal control over ELC program reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18115; Paycheck Protection Program and Health Care Enhancement Act of 2020 (PL 116-139); Coronavirus Response and Relief Supplemental Appropriations Act of 2020 (PL 116-260) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must ensure that every laboratory that performs or analyzes a test that is intended to detect or diagnose a possible case of COVID-19 reports the results from each test to the U.S. Department of Health and Human Services. Condition: During fiscal year 2022, the Maine Center for Disease Control & Prevention (MeCDC) was required to complete the following reports: ? Quarterly and annual performance reports for four separate Federal awards ? Quarterly special reports for jurisdictional testing and positive/negative test results MeCDC could not provide supporting documentation to verify the accuracy, completeness, and timeliness of the filed reports. In addition, all reports were filed without documentation of approval by a secondary person prior to submission. Context: During fiscal year 2022, 16 quarterly performance reports, four annual performance reports, and two quarterly special reports were required to be filed. Cause: ? Lack of adequate internal controls ? Lack of supervisory oversight ? Lack of staff resources due to a significant increase in workload Effect: ? Incorrect or incomplete data may be reported to the Federal government. ? Potential Federal noncompliance due to performance and special reports not filed timely Recommendation: We recommend that MeCDC implement a documented process over the completion, filing, review, and retention of performance and special reports. Corrective Action Plan: See F-23 Management?s Response: The Department agrees with this finding. The Division of Disease Surveillance, within the Maine Center of Disease Control and Prevention put into place a comprehensive process to ensure quarterly and annual performance reports and special reports are properly completed, reviewed, filed, and retained during the fall of 2022. In September 2022, the Division hired a Grants Manager who developed a report tracking system using Microsoft Project. The individuals completing the reports, now complete them in Microsoft Project and from there the Grant Manager reviews for completeness and uploads into the federal site. The Grants Manager sends an email to the Principal Investigator when reports are complete and have been submitted to the federal CDC. Contact: Sara Robinson, Senior Program Manager, MeCDC, DHHS, 207-287-4610 (State Number: 22-1156-01)
(2022-064) Title: Internal control over submission and review of ELC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Office of the State Controller Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. At the close of the fiscal year, the Department and its Service Center reported Federal expenditures of $45 million under the ELC program to OSC; however, current year expenditures actually totaled $59 million. This information was then used by OSC to compile and prepare the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, ELC expenditures were incorrect on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: The 2022 SEFA originally reported total expenditures under ELC totaling $45 million; however, this included $14 million of prior year ELC expenditures that were transferred out of current year SEFA totals to the Coronavirus Relief Fund, resulting in an understatement of fiscal year ELC expenditures. Cause: ? Lack of adequate internal control relating to SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department work with its Service Center to implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-23 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and the DHHS Financial Service Center agree with this finding. The Financial Service Center will work with OSC to develop and implement additional procedures related to reporting of prior period adjustments beginning with the SEFA that is for the State Fiscal Year 2023, by December 31, 2023. DHHS Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1156-02)
(2022-065) Title: Internal control over ELC program cash management needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services (DHHS) Service Center (SC) provides services including human resources, payroll, accounting, and finance to programs administered by DHHS, including the Epidemiology and Laboratory for Infectious Diseases (ELC) program. The DHHS SC requests Federal funds to reimburse ELC program expenditures utilizing a system report of expenditures. This report includes both expenditures that have been paid and expenditures that are pending payment. Expenditures that are pending payment can take a significant amount of time to process. In the Office of the State Auditor?s testing of 48 Federal drawdowns, four drawdowns of Federal funds for the ELC program were beyond the administratively feasible requirement for disbursement. Disbursements ranged from 8 to 63 days after the receipt of Federal funds. The Office of the State Auditor selected a non-statistical random sample. Context: In fiscal year 2022, there were 211 Federal grant draws for the ELC program totaling $43.7 million. The four draws beyond the administratively feasible requirement for disbursement totaled $5.9 million. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC review and revise current policies and include guidance for drawing Federal funds to exclude pending expenditures to ensure that Federal cash is requested based on immediate cash needs. Corrective Action Plan: See F-24 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. Due to the number of individual CDC COVID grants received, the volume of daily processes has increased. The DHHS Financial SC will work to obtain and/or increase estimated revenue within the COVID appropriations. With an approval of estimated revenue, expenses will process first, and federal cash will be drawn after, reducing the risk of CMIA as Federal cash will be instantly replenishing the account rather than waiting for invoices to process. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1156-05)
(2022-066) Title: Internal control over ELC program suspension and debarment needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 180.220 and .300; Division of Contract Management Policy The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. The Division of Contract Management (DCM) requires all subrecipients to register in the System of Award Management (SAM) prior to awarding Federal funds to a recipient. DCM?s policy also requires annual verification, review and documentation of suspension and debarment compliance obtained from the SAM website. This document is required to be retained for each subrecipient that administers the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) grant. Condition: The Department of Health and Human Services? DCM administers subrecipient contracts for the ELC program. Included in all contracts is a Debarment, Performance, and Non- Collusion Certification. Annually, contract administrators are responsible for verifying that entities are not suspended or debarred on the SAM website. The Office of the State Auditor (OSA) selected eight subrecipients for testing compliance with suspension and debarment regulations. DCM could not provide documented support that: ? review and verification procedures were completed for five of the eight subrecipients tested. ? one subrecipient was registered on the SAM website. As a result, compliance with suspension and debarment could not be verified. The Department paid $54,423 to the subrecipient. OSA selected a non-statistical random sample. Context: The Department provided $5.9 million to the 43 subrecipients that administered the ELC program during fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional procedures to ensure that verification of suspension and debarment procedures are performed, properly documented, and retained. This will ensure that the Department does not enter into an agreement with a suspended or debarred entity. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Uniform Guidance part 200.214 identifies that non-Federal entities are subject to the non-procurement debarment and suspension regulations in 2 CFR part 180. 2 CFR part 180 requires that ?when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.? The Department meets this requirement as part of the contracting process by collecting certifications from the Community Agencies stating that they are not suspended or debarred. Therefore, we are in compliance with the Federal requirements for Suspension and debarment. The intent of the Department?s policy to utilize the System for Award Management Exclusions (SAM) is to be an optional and additional assurance to the required collection of certifications that the next lower tier persons are not suspended or debarred. The SAM is utilized as time and resources permit and is not intended to replace the certifications. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: DCM established the following policies to ensure compliance with Federal regulations: ? Subrecipients must register with the SAM prior to receiving Federal funds. ? Annual verification that the subrecipient is not suspended or debarred must be completed by obtaining and retaining such information from the SAM website. ? A Debarment, Performance, and Non-Collusion Certification is included in the subrecipient contract. One subrecipient was not registered with the SAM and the Department could not provide documentation to support that verification was performed for five subrecipients. It is the responsibility of the Department to implement policies and procedures to ensure compliance with Federal regulations. The Department has established such policies and identified these policies as the control mechanism to ascertain that the Department does not contract subrecipients who are suspended or debarred. To attest that a policy is optional negates the effectiveness of the control mechanism. The Department did not follow its established policies; therefore, a failure in the control process exists. The finding remains as stated. (State Number: 22-1156-03)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-067) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $1,447 Likely Questioned Costs: Likely questioned costs totaling $35,002 were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to TANF clients for these services and payments to providers on behalf of TANF clients in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: ? one payment issued in October 2021 overpaid a provider by $22 for Transitional Child Care. Upon further review, OSA found that an additional $506 was overpaid to the child- care provider during fiscal year 2022. The overpayment was identified by the Department in December 2021; however, as of audit testing, 14 months after the overpayment was identified, there has not been a recoupment. ? one payment overpaid a provider by $15 for Transitional Child Care. Upon further review, OSA found that an additional $555 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment overpaid a provider by $17 for Transitional Child Care. Upon further review, OSA found that an additional $323 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment issued in May 2022 overpaid a TANF client a total of $75 for clothing. An advance allowance was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in July 2022 and $66 of the overpayment was recouped on January 6, 2023. OSA selected a non-statistical random sample. Context: In fiscal year 2022, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $6.8 million. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented. We further recommend that the Department increase monitoring procedures over these payments. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Department?s effective internal controls identified the overpayments, made the referrals, and followed procedures for two of the four exceptions noted. The two exceptions that we did not identify as overpayments we believe are in accordance with the reasonably calculated requirement to accomplish one or more of the four TANF purposes and should not be considered unallowable. The criteria cited do not indicate any requirement to recoup funds within a specific time frame and the exceptions noted demonstrate the effective internal controls rather than indicate any misuse of funds. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department?s internal controls did not identify two overpayments in OSA?s sample. The Department did identify the other two overpayments in OSA?s sample; however, for one of those overpayments, no action had been taken by the Department 14 months after the overpayment was identified. Therefore, the Department?s internal controls do not provide reasonable assurance that the Federal award is being managed in compliance with Federal statutes, regulations, and the terms and condition of the award. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Overpayments made to providers or clients with Federal funds are not a necessary cost for the performance of the Federal award; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1111-03)
(2022-068) Title: Internal control over Income Eligibility and Verification System procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 205.56 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to comply with Federal Income Eligibility and Verification System (IEVS) exchange rules and regulations in accordance with program agreements. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Condition: IEVS is used to exchange information among State and Federal agencies to verify various information needed to determine eligibility for Federal financial assistance. This information is updated in the Automated Client Eligibility System (ACES) to ensure eligibility determinations are made based on current information. IEVS generates various discrepancy reports on a weekly, monthly, and quarterly basis. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Federal guidance over the TANF program outlines audit procedures to ensure that the State has established and implemented the required IEVS exchange for data matching and verification of such data. These procedures include testing a sample of TANF cases subject to IEVS. OSA requested a list of TANF cases subject to IEVS for testing purposes; in response, the Department provided OSA with all IEVS discrepancy reports run in fiscal year 2022. The reports provided by the Department contain cases for TANF, SNAP, and Medicaid/Medicare, and do not have a specific Federal program indicator. The Department was unable to provide OSA with a report that isolates TANF-specific cases subject to IEVS. Without a population of TANF-specific cases, OSA is unable to verify that the program is in compliance with Federal requirements. Context: Approximately 195 IEVS reports are required to be generated annually. The number of discrepancies on each report can vary from zero to almost 20,000. The Department cannot determine the number of discrepancies related to TANF. Cause: ? Lack of resources ? Lack of adequate procedures to ensure that an accurate report of TANF cases subject to IEVS can be provided Effect: ? IEVS information may not be updated timely in ACES, which could result in incorrect eligibility determinations. ? Failure to maintain documentation to support compliance with required TANF exchange rules may result in the U.S. Department of Health and Human Services penalizing the State up to two percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure IEVS discrepancy reports can be provided for the identified Federal award program so that audit procedures can be performed in accordance with Federal regulations. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has conducted the required IEVS eligibility verifications. Additionally, sufficient evidence of these efforts has been provided to the Office of the State Auditor so that audit procedures can be performed in accordance with Federal regulations. OFI utilizes the Federally provided IEVS system which integrates the three named population groups (Medicaid, SNAP, TANF). The IEVS discrepancy reports have not contained Federal program indicators since program inception over 20 years ago. This is consistent with the methodology utilized by the Social Security Administration, as they too group the OFI programs together in their discrepancy reports. These same reports have been provided for prior Single Audits without being considered an exception condition. Upon request, the Department provided OSA: 1. All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF. 2. A complete listing of all TANF cases subject to IEVS in State fiscal year 2022. 3. Access to our Automated Client Eligibility System, which documents all IEVS related case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of TANF cases subject to IEVS. In an internal control meeting on January 9, 2023, between OSA and OFI, OFI management raised concerns regarding IEVS exceptions noted in finding 2021-043 in the fiscal year ending June 30, 2021 Single Audit Report. Management asserted that the exceptions listed in the finding were not TANF-specific as they related mainly to Medicaid and SNAP. In addition, in accordance with Federal guidelines, Assistance Listing Number 93.558, OSA is required to test a sample of TANF cases subject to IEVS in order to meet audit requirements. OSA requested a population of TANF cases subject to IEVS in order to draw a sample for testing purposes. OFI did not provide the information requested and therefore, OSA was unable to test compliance with 45 CFR 205.56. In response to the materials provided to OSA by OFI: 1. ?All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF.? The IEVS discrepancy reports provided by the Department contain cases for Medicaid, SNAP, and TANF, and do not have a specific Federal program indicator to delineate TANF-specific cases. OFI further informed OSA that they did not have the current bandwidth to manually cross-walk the complete list of all TANF eligible recipients against the IEVS discrepancy reports to identify TANF-only cases. OFI insisted that OSA perform the task. Suggesting that OSA crosswalk information to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, the reports provided cannot be utilized for audit testing. 2. ?A complete listing of all TANF cases subject to IEVS in State fiscal year 2022.? This list includes all TANF eligible clients for fiscal year 2022 subject to IEVS; however, not all TANF eligible clients will show up on an IEVS discrepancy report. Therefore, this listing cannot be utilized for audit testing. 3. ?Access to our Automated Client Eligibility System, which documents all IEVS related case notes.? This provides OSA with access to ACES for audit testing purposes. As noted above, OSA was not provided the information requested in order to complete audit testing. Therefore, as detailed in the finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 205.56. The finding remains as stated. (State Number: 22-1111-02)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-070) Title: Internal control over TANF client child support sanction procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 264.30; 42 USC 608(a)(2) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. If the Department determines that an individual is not cooperating with child support enforcement requirements, the Department is required to sanction the individual by deducting an amount equal to not less than 25 percent from the TANF assistance that would otherwise be provided to the family of the individual and may deny the family any TANF assistance. Condition: The Department?s Division of Support Enforcement and Recovery (DSER) is responsible for enforcing child support requirements. DSER sends email notifications (sanction requests) to TANF personnel when individuals not cooperating with child support enforcement requirements are identified. If TANF personnel determine that the individual needs to be sanctioned after reviewing the individual?s case, they will process the sanction request in the Automated Client Eligibility System (ACES). Federal guidance requires the Office of the State Auditor (OSA) to develop audit procedures in order to test a sample of cases referred to TANF by DSER. OSA requested a list of sanction requests from DSER for testing purposes. In response to this request, the Department provided 960 email notifications relating to child support sanction requests. OSA selected a random sample of 60 emails from the population for testing and determined the following: ? 35 emails were DSER requests to lift prior sanctions imposed. OSA was unable to determine if the sanction was requested and referred during the fiscal year. ? One email requested a child support affidavit which is not related to child support sanctions. ? One email contained a disability determination review application which is not related to child support sanctions. ? One email requested a child support sanction but omitted client identification information required to process the request. Therefore, OSA was unable to test compliance with sanction requirements for 38 of the 60 emails sampled from the population of sanction requests provided by the Department. OSA selected a non-statistical random sample. Context: DSER personnel transmit sanction requests through email to a general inbox that receives other notifications and collects approximately 400 emails per day. The sanction requests are then forwarded by a designated supervisor to the appropriate TANF personnel to be processed in ACES. Cause: ? Lack of resources. The Department is unable to obtain a complete listing of sanction requests from DSER without dedicating a significant amount of time and resources sorting through the general email inbox. ? Lack of supervisory oversight Effect: ? Noncompliant clients may be paid benefits that they are not entitled to receive. ? Failure to maintain appropriate documentation to demonstrate compliance with Federal program sanction requirements may result in the U.S. Department of Health and Human Services penalizing the State for up to five percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure that all sanction requests are maintained in a central repository so that they can be easily retrieved for tracking and review purposes. We further recommend that the Department increase oversight to ensure compliance with Federal requirements. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has sufficient internal controls in place to ensure compliance with Federal requirements. Specifically, based on the finding?s stated condition, OSA did not take exception with the 22 items that were actually tested for compliance. Additionally, OFI has provided sufficient information for OSA to identify and conduct the audit and compliance testing of cases referred by DSER for sanction. The Department has provided OSA with the following material as requested: 1. The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency. 2. The list of all OFI-TANF clients actually sanctioned by TANF Eligibility. 3. The list of all OFI-TANF clients 4. Copies of all emails pertaining to all sanction activity 5. Access to our Automated Client Eligibility System which includes all documented case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of cases referred to TANF by the Title IV-D agency, DSER. In an internal control meeting held on January 11, 2023, between OSA and the Department, the Department identified the control process over sanction requests used by DSER staff after non- compliance by a Custodial Parent (CP) as an email generated by DSER staff that is sent to a general email box at OFI with the subject line of ?Sanction Request?. The Department established that the referral email alerts OFI Eligibility Specialists to the issue and requests OFI to sanction the CP. OSA requested the population of these emails in order to draw a sample for audit testing and was provided a listing of 960 emails from which OSA selected a random sample. OSA tested compliance with sanction requests from the random sample. As a result of this testing, OSA agrees that the population provided by the Department was incorrect. In response to the materials provided to OSA by the Department: 1. ?The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency.? This list was generated based on noncooperation dates entered in the Child Support Enforcement of Maine (CSEME) system; however, the Department confirmed that noncooperation dates are not consistently entered into CSEME by DSER personnel. Therefore, this list cannot be relied upon. 2. ?The list of all OFI-TANF clients actually sanctioned by TANF Eligibility.? This list documents sanction requests that were processed by OFI Eligibility. The list omits requests where OFI eligibility determined a sanction request was not required. Therefore, this list cannot be relied upon. 3. ?The list of all OFI-TANF clients.? This list includes all TANF eligible clients for fiscal year 2022; however, not all TANF eligible clients are sanctioned for child support noncooperation. Therefore, this list cannot be relied upon. 4. ?Copies of all emails pertaining to all sanction activity.? The Department provided OSA with 960 emails that were both sanction and non-sanction related. Suggesting that OSA categorize emails to delineate sanction requests versus other emails in order to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, as noted above, this list cannot be relied upon. 5. ?Access to our Automated Client Eligibility System (ACES) which includes all documented case notes.? This provides OSA with access to ACES for audit testing purposes which OSA completed based on the information provided by the Department. Therefore, as detailed in this finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 264.30. The finding remains as stated. (State Number: 22-1111-01)
(2022-071) Title: Internal control over TANF subrecipient risk evaluation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of Child and Family Services Division of Contract Management Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in 2 CFR 200.332. Condition: The Department has established subrecipient monitoring procedures depending on whether the subaward is competitively bid or not. If a subaward is competitively bid, the Department seeks input from the Department of Health and Human Services Service Center, and the Department?s Division of Audit and Division of Contract Management regarding known issues with the provider who submitted the bid. Those responses are collected and provided to the evaluation team which consists of various program personnel. The subaward agreement is then drafted and the level of subrecipient monitoring is included in the agreement. If a subaward is not competitively bid, the subaward agreement is drafted based on the level of subrecipient monitoring that the Department has established for the provided services. The Office of the State Auditor (OSA) selected seven TANF subrecipients for testing and found: ? one subrecipient competitively bid on the subaward. The Department was able to provide evidence to support that feedback was solicited from other Bureaus for any known issues or prior noncompliance; however, documentary evidence could not be provided to support the level of subrecipient monitoring that was completed. ? six subrecipients did not competitively bid on the subaward. For those six subrecipients, no documentary evidence could be provided to support the level of subrecipient monitoring that was completed. OSA selected a non-statistical random sample. Context: The Department provided $17.9 million to TANF subrecipients during fiscal year 2022. Cause: Lack of adequate policies and procedures Effect: ? Without a documented process, subrecipient risk evaluation procedures may not be consistently followed, and documentation may not be adequately maintained. ? Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department: ? document procedures that outline the collaborative process with all Bureaus. ? implement policies and procedures that require evaluation of each subrecipient?s risk of noncompliance specifically for the purposes of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-26 Management?s Response: The Department disagrees with this finding. The Department has subrecipient monitoring procedures for all of its subrecipients whether they were competitively bid or not. The first assessment of risk, as noted in the finding, is when a subaward is competitively bid. Secondly, another risk assessment built into the Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP) in which requires higher risk subrecipients to undergo a higher level of testing. Additionally, there are audit and review requirements at a much lower threshold than that of the Uniform Guidance (UG). Finally, the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. The Department?s subrecipient monitoring procedures ensures that we comply with the UG 200.332(d) Pass-through entity (PTE) monitoring of the subrecipient must include: 1) Review of financial and performance reports. 2) Following-up and ensuring that subrecipients take timely and appropriate action on all deficiencies. 3) Issues management decisions. 4) PTE is responsible for resolving audit findings specifically related to the subaward. Based on the Department?s MAAP rules we ensure we comply with UG 200.332(e). Depending on the PTE?s assessment of risk, the following tools may be useful: 1) Training and technical assistance. 2) On-site reviews. 3) Arranging for agreed upon procedures. The Department covers #3 by ensuring that all of our subrecipients have a requirement to submit to the Department a/an Audit, Review or Schedule of Expenditures of Department Awards (SEDA). Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The Department has misinterpreted the Federal regulation cited in this finding. The Department has responded to 2 CFR 200.332(d), which identifies monitoring procedures to be conducted during the subrecipient award period. OSA audited compliance with this during-the-award monitoring requirement and did not identify deficiencies. The Federal regulation that the Department failed to meet is 2 CFR 200.332(b). This regulation identifies procedures to be performed prior to monitoring procedures in order to determine the level of monitoring required for each subrecipient. 2 CFR 200.332(b) states that the Department 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, which may include consideration of factors such as: ? the subrecipient?s prior experience with the same or similar subawards; ? the results of previous audits including whether or not the subrecipient receives a Single Audit, and the extent to which the same or similar subaward has been audited as a major program; ? whether the subrecipient has new personnel or new or substantially changed systems; and ? the extent and results of Federal awarding agency monitoring. The Department did not provide any documentation to support that monitoring procedures performed were based on an evaluation of the subrecipient?s risk of noncompliance. The finding remains as stated. (State Number: 22-1111-05)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-073) Title: Internal control over TANF reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302(b) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements. Condition: The Department is required to submit accurate and complete financial reports to the Federal government. On the SF-425 financial report for the period ending December 31, 2021, cumulative Federal cash disbursements should have been reported in the amount of $54,898,345 instead of $32,885,310. Context: TANF program expenditures totaled $81.9 million in fiscal year 2022. Cause: Lack of supervisory oversight Effect: Noncompliance with Federal reporting requirements Recommendation: Although TANF is no longer required by the Federal government to submit SF-425 reports beginning with the period ending March 31, 2022, we recommend that the Department enhance their review procedures to ensure all financial reports are accurate and complete. Corrective Action Plan: See F-27 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Effective April 1, 2022, the US Department of Health and Human Services grant recipients are no longer required to complete the quarterly Federal Cash Transaction Report ?FCTR? (also referred to as the FFR-425 or SF-425) to report cumulative Federal cash disbursements. Procedures are currently in place to ensure Federal financial reporting is reviewed accurately. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1100-03)
(2022-074) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-27 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-03)
(2022-075) Title: Internal control over TANF performance reporting and work participation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 261.60 through .62; 45 CFR 265.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain adequate documentation, perform adequate verification, and implement other control procedures for TANF client work participation. Work participation activities include unsubsidized employment, job search and job readiness, job skills training directly related to employment, vocational education, and other work-related programs. The Department must report the actual hours that a work-eligible TANF client participates in these work-related activities, on the ACF-199 TANF Data Report and the ACF-209 SSP-MOE Data Report on a quarterly basis. These reports are required by the Federal government. Condition: The Department reported incorrect work participation information on the ACF-199 and ACF-209 reports. Of the 120 clients tested, inaccurate work participation data was reported for 14 clients, including inaccurate: ? subsidized childcare, ? countable months towards the Federal time limit of 60 months, ? work participation status, ? unsubsidized employment hours, ? and vocational education training hours The Office of the State Auditor selected a non-statistical random sample. Context: The Department must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of information reported to the Federal government and used to calculate work participation rates. In fiscal year 2022, the number of clients reported on the ACF-199 report ranged from approximately 11,000 to 13,000 clients, and the number of clients reported on the ACF-209 report ranged from approximately 36,000 to 38,000 clients. Cause: ? Lack of adequate procedures to ensure work participation data is accurately reflected in the Automated Client Eligibility System (ACES) and Fedcap Customer Assistance for Re- employment and Economic Support (FedcapCARES) case management system, and reported correctly in the quarterly Federal performance reports ? Lack of supervisory oversight Effect: ? Incorrect work participation data reported to the Federal government may affect the Federal requirement for TANF?s State Maintenance of Effort. ? The Federal government may penalize the State by an amount not less than one percent and not more than five percent of the grant award for violation of work verification plan requirements. Recommendation: We recommend that the Department enhance existing procedures to ensure that the information reported on the ACF-199 and ACF-209 reports is accurate and complete prior to submission to the Federal government. This should include increased systemic monitoring to improve the reliability of work participation data that is reported to the Federal government. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Department acknowledges eight of the fourteen cases cited as containing errors. Significant improvements have been made to the systemic monitoring of the ACF-199 and ACF-209 reports as evidenced by recent edits to the standard operating procedures governing this system in February and May of 2022. Due to the nature of corrective action plans, and the timing of the state audit, the Department does not believe a corrective action plan is warranted at this time. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1111-06)
(2022-076) Title: Internal control over TANF subrecipient audit procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited. Condition: The Department requires subrecipients to submit their Single Audit to the Department?s Division of Audit. The Division maintains a database to track when subrecipient Single Audit reports are due and ensures that they are received. The Office of the State Auditor (OSA) tested four TANF subrecipients that had a Single Audit due in fiscal year 2022 for compliance with Federal regulations and found that the Division did not obtain the Single Audit for one subrecipient. The Division could not provide documentation to support that they contacted the subrecipient when the Single Audit was late. OSA was able to confirm that the subrecipient did have a Single Audit as required. Context: A Single Audit was due in fiscal year 2022 for eight TANF subrecipients that received $28.2 million of Federal funds in fiscal year 2021. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance existing procedures to ensure that subrecipients that expend $750,000 or more in Federal awards complete and submit a Single Audit within the required time requirements. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. We will revise our standard operating procedures (SOP) to include the search for out of state subrecipients on the Federal Audit Clearinghouse. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 22-1100-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-067) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $1,447 Likely Questioned Costs: Likely questioned costs totaling $35,002 were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to TANF clients for these services and payments to providers on behalf of TANF clients in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: ? one payment issued in October 2021 overpaid a provider by $22 for Transitional Child Care. Upon further review, OSA found that an additional $506 was overpaid to the child- care provider during fiscal year 2022. The overpayment was identified by the Department in December 2021; however, as of audit testing, 14 months after the overpayment was identified, there has not been a recoupment. ? one payment overpaid a provider by $15 for Transitional Child Care. Upon further review, OSA found that an additional $555 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment overpaid a provider by $17 for Transitional Child Care. Upon further review, OSA found that an additional $323 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment issued in May 2022 overpaid a TANF client a total of $75 for clothing. An advance allowance was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in July 2022 and $66 of the overpayment was recouped on January 6, 2023. OSA selected a non-statistical random sample. Context: In fiscal year 2022, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $6.8 million. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented. We further recommend that the Department increase monitoring procedures over these payments. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Department?s effective internal controls identified the overpayments, made the referrals, and followed procedures for two of the four exceptions noted. The two exceptions that we did not identify as overpayments we believe are in accordance with the reasonably calculated requirement to accomplish one or more of the four TANF purposes and should not be considered unallowable. The criteria cited do not indicate any requirement to recoup funds within a specific time frame and the exceptions noted demonstrate the effective internal controls rather than indicate any misuse of funds. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department?s internal controls did not identify two overpayments in OSA?s sample. The Department did identify the other two overpayments in OSA?s sample; however, for one of those overpayments, no action had been taken by the Department 14 months after the overpayment was identified. Therefore, the Department?s internal controls do not provide reasonable assurance that the Federal award is being managed in compliance with Federal statutes, regulations, and the terms and condition of the award. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Overpayments made to providers or clients with Federal funds are not a necessary cost for the performance of the Federal award; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1111-03)
(2022-068) Title: Internal control over Income Eligibility and Verification System procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 205.56 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to comply with Federal Income Eligibility and Verification System (IEVS) exchange rules and regulations in accordance with program agreements. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Condition: IEVS is used to exchange information among State and Federal agencies to verify various information needed to determine eligibility for Federal financial assistance. This information is updated in the Automated Client Eligibility System (ACES) to ensure eligibility determinations are made based on current information. IEVS generates various discrepancy reports on a weekly, monthly, and quarterly basis. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Federal guidance over the TANF program outlines audit procedures to ensure that the State has established and implemented the required IEVS exchange for data matching and verification of such data. These procedures include testing a sample of TANF cases subject to IEVS. OSA requested a list of TANF cases subject to IEVS for testing purposes; in response, the Department provided OSA with all IEVS discrepancy reports run in fiscal year 2022. The reports provided by the Department contain cases for TANF, SNAP, and Medicaid/Medicare, and do not have a specific Federal program indicator. The Department was unable to provide OSA with a report that isolates TANF-specific cases subject to IEVS. Without a population of TANF-specific cases, OSA is unable to verify that the program is in compliance with Federal requirements. Context: Approximately 195 IEVS reports are required to be generated annually. The number of discrepancies on each report can vary from zero to almost 20,000. The Department cannot determine the number of discrepancies related to TANF. Cause: ? Lack of resources ? Lack of adequate procedures to ensure that an accurate report of TANF cases subject to IEVS can be provided Effect: ? IEVS information may not be updated timely in ACES, which could result in incorrect eligibility determinations. ? Failure to maintain documentation to support compliance with required TANF exchange rules may result in the U.S. Department of Health and Human Services penalizing the State up to two percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure IEVS discrepancy reports can be provided for the identified Federal award program so that audit procedures can be performed in accordance with Federal regulations. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has conducted the required IEVS eligibility verifications. Additionally, sufficient evidence of these efforts has been provided to the Office of the State Auditor so that audit procedures can be performed in accordance with Federal regulations. OFI utilizes the Federally provided IEVS system which integrates the three named population groups (Medicaid, SNAP, TANF). The IEVS discrepancy reports have not contained Federal program indicators since program inception over 20 years ago. This is consistent with the methodology utilized by the Social Security Administration, as they too group the OFI programs together in their discrepancy reports. These same reports have been provided for prior Single Audits without being considered an exception condition. Upon request, the Department provided OSA: 1. All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF. 2. A complete listing of all TANF cases subject to IEVS in State fiscal year 2022. 3. Access to our Automated Client Eligibility System, which documents all IEVS related case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of TANF cases subject to IEVS. In an internal control meeting on January 9, 2023, between OSA and OFI, OFI management raised concerns regarding IEVS exceptions noted in finding 2021-043 in the fiscal year ending June 30, 2021 Single Audit Report. Management asserted that the exceptions listed in the finding were not TANF-specific as they related mainly to Medicaid and SNAP. In addition, in accordance with Federal guidelines, Assistance Listing Number 93.558, OSA is required to test a sample of TANF cases subject to IEVS in order to meet audit requirements. OSA requested a population of TANF cases subject to IEVS in order to draw a sample for testing purposes. OFI did not provide the information requested and therefore, OSA was unable to test compliance with 45 CFR 205.56. In response to the materials provided to OSA by OFI: 1. ?All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF.? The IEVS discrepancy reports provided by the Department contain cases for Medicaid, SNAP, and TANF, and do not have a specific Federal program indicator to delineate TANF-specific cases. OFI further informed OSA that they did not have the current bandwidth to manually cross-walk the complete list of all TANF eligible recipients against the IEVS discrepancy reports to identify TANF-only cases. OFI insisted that OSA perform the task. Suggesting that OSA crosswalk information to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, the reports provided cannot be utilized for audit testing. 2. ?A complete listing of all TANF cases subject to IEVS in State fiscal year 2022.? This list includes all TANF eligible clients for fiscal year 2022 subject to IEVS; however, not all TANF eligible clients will show up on an IEVS discrepancy report. Therefore, this listing cannot be utilized for audit testing. 3. ?Access to our Automated Client Eligibility System, which documents all IEVS related case notes.? This provides OSA with access to ACES for audit testing purposes. As noted above, OSA was not provided the information requested in order to complete audit testing. Therefore, as detailed in the finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 205.56. The finding remains as stated. (State Number: 22-1111-02)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-070) Title: Internal control over TANF client child support sanction procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 264.30; 42 USC 608(a)(2) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. If the Department determines that an individual is not cooperating with child support enforcement requirements, the Department is required to sanction the individual by deducting an amount equal to not less than 25 percent from the TANF assistance that would otherwise be provided to the family of the individual and may deny the family any TANF assistance. Condition: The Department?s Division of Support Enforcement and Recovery (DSER) is responsible for enforcing child support requirements. DSER sends email notifications (sanction requests) to TANF personnel when individuals not cooperating with child support enforcement requirements are identified. If TANF personnel determine that the individual needs to be sanctioned after reviewing the individual?s case, they will process the sanction request in the Automated Client Eligibility System (ACES). Federal guidance requires the Office of the State Auditor (OSA) to develop audit procedures in order to test a sample of cases referred to TANF by DSER. OSA requested a list of sanction requests from DSER for testing purposes. In response to this request, the Department provided 960 email notifications relating to child support sanction requests. OSA selected a random sample of 60 emails from the population for testing and determined the following: ? 35 emails were DSER requests to lift prior sanctions imposed. OSA was unable to determine if the sanction was requested and referred during the fiscal year. ? One email requested a child support affidavit which is not related to child support sanctions. ? One email contained a disability determination review application which is not related to child support sanctions. ? One email requested a child support sanction but omitted client identification information required to process the request. Therefore, OSA was unable to test compliance with sanction requirements for 38 of the 60 emails sampled from the population of sanction requests provided by the Department. OSA selected a non-statistical random sample. Context: DSER personnel transmit sanction requests through email to a general inbox that receives other notifications and collects approximately 400 emails per day. The sanction requests are then forwarded by a designated supervisor to the appropriate TANF personnel to be processed in ACES. Cause: ? Lack of resources. The Department is unable to obtain a complete listing of sanction requests from DSER without dedicating a significant amount of time and resources sorting through the general email inbox. ? Lack of supervisory oversight Effect: ? Noncompliant clients may be paid benefits that they are not entitled to receive. ? Failure to maintain appropriate documentation to demonstrate compliance with Federal program sanction requirements may result in the U.S. Department of Health and Human Services penalizing the State for up to five percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure that all sanction requests are maintained in a central repository so that they can be easily retrieved for tracking and review purposes. We further recommend that the Department increase oversight to ensure compliance with Federal requirements. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has sufficient internal controls in place to ensure compliance with Federal requirements. Specifically, based on the finding?s stated condition, OSA did not take exception with the 22 items that were actually tested for compliance. Additionally, OFI has provided sufficient information for OSA to identify and conduct the audit and compliance testing of cases referred by DSER for sanction. The Department has provided OSA with the following material as requested: 1. The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency. 2. The list of all OFI-TANF clients actually sanctioned by TANF Eligibility. 3. The list of all OFI-TANF clients 4. Copies of all emails pertaining to all sanction activity 5. Access to our Automated Client Eligibility System which includes all documented case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of cases referred to TANF by the Title IV-D agency, DSER. In an internal control meeting held on January 11, 2023, between OSA and the Department, the Department identified the control process over sanction requests used by DSER staff after non- compliance by a Custodial Parent (CP) as an email generated by DSER staff that is sent to a general email box at OFI with the subject line of ?Sanction Request?. The Department established that the referral email alerts OFI Eligibility Specialists to the issue and requests OFI to sanction the CP. OSA requested the population of these emails in order to draw a sample for audit testing and was provided a listing of 960 emails from which OSA selected a random sample. OSA tested compliance with sanction requests from the random sample. As a result of this testing, OSA agrees that the population provided by the Department was incorrect. In response to the materials provided to OSA by the Department: 1. ?The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency.? This list was generated based on noncooperation dates entered in the Child Support Enforcement of Maine (CSEME) system; however, the Department confirmed that noncooperation dates are not consistently entered into CSEME by DSER personnel. Therefore, this list cannot be relied upon. 2. ?The list of all OFI-TANF clients actually sanctioned by TANF Eligibility.? This list documents sanction requests that were processed by OFI Eligibility. The list omits requests where OFI eligibility determined a sanction request was not required. Therefore, this list cannot be relied upon. 3. ?The list of all OFI-TANF clients.? This list includes all TANF eligible clients for fiscal year 2022; however, not all TANF eligible clients are sanctioned for child support noncooperation. Therefore, this list cannot be relied upon. 4. ?Copies of all emails pertaining to all sanction activity.? The Department provided OSA with 960 emails that were both sanction and non-sanction related. Suggesting that OSA categorize emails to delineate sanction requests versus other emails in order to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, as noted above, this list cannot be relied upon. 5. ?Access to our Automated Client Eligibility System (ACES) which includes all documented case notes.? This provides OSA with access to ACES for audit testing purposes which OSA completed based on the information provided by the Department. Therefore, as detailed in this finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 264.30. The finding remains as stated. (State Number: 22-1111-01)
(2022-071) Title: Internal control over TANF subrecipient risk evaluation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of Child and Family Services Division of Contract Management Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in 2 CFR 200.332. Condition: The Department has established subrecipient monitoring procedures depending on whether the subaward is competitively bid or not. If a subaward is competitively bid, the Department seeks input from the Department of Health and Human Services Service Center, and the Department?s Division of Audit and Division of Contract Management regarding known issues with the provider who submitted the bid. Those responses are collected and provided to the evaluation team which consists of various program personnel. The subaward agreement is then drafted and the level of subrecipient monitoring is included in the agreement. If a subaward is not competitively bid, the subaward agreement is drafted based on the level of subrecipient monitoring that the Department has established for the provided services. The Office of the State Auditor (OSA) selected seven TANF subrecipients for testing and found: ? one subrecipient competitively bid on the subaward. The Department was able to provide evidence to support that feedback was solicited from other Bureaus for any known issues or prior noncompliance; however, documentary evidence could not be provided to support the level of subrecipient monitoring that was completed. ? six subrecipients did not competitively bid on the subaward. For those six subrecipients, no documentary evidence could be provided to support the level of subrecipient monitoring that was completed. OSA selected a non-statistical random sample. Context: The Department provided $17.9 million to TANF subrecipients during fiscal year 2022. Cause: Lack of adequate policies and procedures Effect: ? Without a documented process, subrecipient risk evaluation procedures may not be consistently followed, and documentation may not be adequately maintained. ? Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department: ? document procedures that outline the collaborative process with all Bureaus. ? implement policies and procedures that require evaluation of each subrecipient?s risk of noncompliance specifically for the purposes of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-26 Management?s Response: The Department disagrees with this finding. The Department has subrecipient monitoring procedures for all of its subrecipients whether they were competitively bid or not. The first assessment of risk, as noted in the finding, is when a subaward is competitively bid. Secondly, another risk assessment built into the Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP) in which requires higher risk subrecipients to undergo a higher level of testing. Additionally, there are audit and review requirements at a much lower threshold than that of the Uniform Guidance (UG). Finally, the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. The Department?s subrecipient monitoring procedures ensures that we comply with the UG 200.332(d) Pass-through entity (PTE) monitoring of the subrecipient must include: 1) Review of financial and performance reports. 2) Following-up and ensuring that subrecipients take timely and appropriate action on all deficiencies. 3) Issues management decisions. 4) PTE is responsible for resolving audit findings specifically related to the subaward. Based on the Department?s MAAP rules we ensure we comply with UG 200.332(e). Depending on the PTE?s assessment of risk, the following tools may be useful: 1) Training and technical assistance. 2) On-site reviews. 3) Arranging for agreed upon procedures. The Department covers #3 by ensuring that all of our subrecipients have a requirement to submit to the Department a/an Audit, Review or Schedule of Expenditures of Department Awards (SEDA). Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The Department has misinterpreted the Federal regulation cited in this finding. The Department has responded to 2 CFR 200.332(d), which identifies monitoring procedures to be conducted during the subrecipient award period. OSA audited compliance with this during-the-award monitoring requirement and did not identify deficiencies. The Federal regulation that the Department failed to meet is 2 CFR 200.332(b). This regulation identifies procedures to be performed prior to monitoring procedures in order to determine the level of monitoring required for each subrecipient. 2 CFR 200.332(b) states that the Department 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, which may include consideration of factors such as: ? the subrecipient?s prior experience with the same or similar subawards; ? the results of previous audits including whether or not the subrecipient receives a Single Audit, and the extent to which the same or similar subaward has been audited as a major program; ? whether the subrecipient has new personnel or new or substantially changed systems; and ? the extent and results of Federal awarding agency monitoring. The Department did not provide any documentation to support that monitoring procedures performed were based on an evaluation of the subrecipient?s risk of noncompliance. The finding remains as stated. (State Number: 22-1111-05)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-073) Title: Internal control over TANF reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302(b) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements. Condition: The Department is required to submit accurate and complete financial reports to the Federal government. On the SF-425 financial report for the period ending December 31, 2021, cumulative Federal cash disbursements should have been reported in the amount of $54,898,345 instead of $32,885,310. Context: TANF program expenditures totaled $81.9 million in fiscal year 2022. Cause: Lack of supervisory oversight Effect: Noncompliance with Federal reporting requirements Recommendation: Although TANF is no longer required by the Federal government to submit SF-425 reports beginning with the period ending March 31, 2022, we recommend that the Department enhance their review procedures to ensure all financial reports are accurate and complete. Corrective Action Plan: See F-27 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Effective April 1, 2022, the US Department of Health and Human Services grant recipients are no longer required to complete the quarterly Federal Cash Transaction Report ?FCTR? (also referred to as the FFR-425 or SF-425) to report cumulative Federal cash disbursements. Procedures are currently in place to ensure Federal financial reporting is reviewed accurately. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1100-03)
(2022-074) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-27 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-03)
(2022-075) Title: Internal control over TANF performance reporting and work participation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 261.60 through .62; 45 CFR 265.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain adequate documentation, perform adequate verification, and implement other control procedures for TANF client work participation. Work participation activities include unsubsidized employment, job search and job readiness, job skills training directly related to employment, vocational education, and other work-related programs. The Department must report the actual hours that a work-eligible TANF client participates in these work-related activities, on the ACF-199 TANF Data Report and the ACF-209 SSP-MOE Data Report on a quarterly basis. These reports are required by the Federal government. Condition: The Department reported incorrect work participation information on the ACF-199 and ACF-209 reports. Of the 120 clients tested, inaccurate work participation data was reported for 14 clients, including inaccurate: ? subsidized childcare, ? countable months towards the Federal time limit of 60 months, ? work participation status, ? unsubsidized employment hours, ? and vocational education training hours The Office of the State Auditor selected a non-statistical random sample. Context: The Department must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of information reported to the Federal government and used to calculate work participation rates. In fiscal year 2022, the number of clients reported on the ACF-199 report ranged from approximately 11,000 to 13,000 clients, and the number of clients reported on the ACF-209 report ranged from approximately 36,000 to 38,000 clients. Cause: ? Lack of adequate procedures to ensure work participation data is accurately reflected in the Automated Client Eligibility System (ACES) and Fedcap Customer Assistance for Re- employment and Economic Support (FedcapCARES) case management system, and reported correctly in the quarterly Federal performance reports ? Lack of supervisory oversight Effect: ? Incorrect work participation data reported to the Federal government may affect the Federal requirement for TANF?s State Maintenance of Effort. ? The Federal government may penalize the State by an amount not less than one percent and not more than five percent of the grant award for violation of work verification plan requirements. Recommendation: We recommend that the Department enhance existing procedures to ensure that the information reported on the ACF-199 and ACF-209 reports is accurate and complete prior to submission to the Federal government. This should include increased systemic monitoring to improve the reliability of work participation data that is reported to the Federal government. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Department acknowledges eight of the fourteen cases cited as containing errors. Significant improvements have been made to the systemic monitoring of the ACF-199 and ACF-209 reports as evidenced by recent edits to the standard operating procedures governing this system in February and May of 2022. Due to the nature of corrective action plans, and the timing of the state audit, the Department does not believe a corrective action plan is warranted at this time. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1111-06)
(2022-076) Title: Internal control over TANF subrecipient audit procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited. Condition: The Department requires subrecipients to submit their Single Audit to the Department?s Division of Audit. The Division maintains a database to track when subrecipient Single Audit reports are due and ensures that they are received. The Office of the State Auditor (OSA) tested four TANF subrecipients that had a Single Audit due in fiscal year 2022 for compliance with Federal regulations and found that the Division did not obtain the Single Audit for one subrecipient. The Division could not provide documentation to support that they contacted the subrecipient when the Single Audit was late. OSA was able to confirm that the subrecipient did have a Single Audit as required. Context: A Single Audit was due in fiscal year 2022 for eight TANF subrecipients that received $28.2 million of Federal funds in fiscal year 2021. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance existing procedures to ensure that subrecipients that expend $750,000 or more in Federal awards complete and submit a Single Audit within the required time requirements. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. We will revise our standard operating procedures (SOP) to include the search for out of state subrecipients on the Federal Audit Clearinghouse. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 22-1100-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-077) Title: Internal control over Child Support Enforcement expenditures needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Child Support Enforcement Assistance Listing Number: 93.563 Federal Award Identification Number: 2001MECSES, 2101MECSES, 2201MECSES Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 2 CFR 200.403; Cooperative Agreement Between State of Maine DHHS and Maine State Judicial Branch for State Fiscal Years 2022 and 2023, Section V (b)(1) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?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 determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Except where otherwise authorized by statute, costs must conform to any limitations or exclusions set forth in cost principles or in the Federal award as to types or amount of cost items. The Administrative Office of the Courts (AOC) under the Judicial Branch must provide a report to the Department of Health and Human Services? (DHHS) Division of Support and Recovery (DSER) for all Judicial Branch estimated expenditures. This report must detail costs that are eligible for Federal financial participation and must be provided within 35 calendar days after the close of the quarters ending in March, June, September, and December. These estimated expenditures are calculated using the per minute rate that was in effect for the prior fiscal year. Within 35 days after the close of the State fiscal year, the AOC will update the per minute rate and provide DSER a report with actual expenditures for the State fiscal year. Condition: The Child Support Enforcement (CSE) program is administered by DSER within DHHS. DHHS has a cooperative agreement with AOC that defines roles, relationships, and responsibilities of the parties, and sets forth a basis for financial reimbursement for court services provided to DHHS by AOC. These services include conducting paternity hearings; hearings to establish, modify, or enforce support orders; civil and criminal complaint hearings related to CSE; providing mediation services; and conducting proceedings related to income withholding responsibilities. AOC sends monthly invoices to the DHHS Service Center (DHHS SC) with estimated costs for work performed for the CSE program. DHHS SC is responsible for transferring funds from the CSE program to AOC. On a quarterly basis, AOC provides DHHS SC with a reconciliation of estimated costs to actual costs. This quarterly reconciliation utilizes the per minute rate that was in effect for the prior fiscal year and is due 35 days after the close of the quarter. Annually, the per minute rate is updated and AOC provides DHHS SC with a final report of actual costs with the updated per minute rate. This final report is due within 35 days after the close of the fiscal year. The Office of the State Auditor (OSA) selected six transfers from DHHS SC to AOC for testing and found that costs incurred for court services were not adequately supported. DHHS SC did not receive two quarterly reports from AOC; therefore, court expenditures were based on estimated costs rather than actual costs. Furthermore, the annual report and reconciliation of estimated costs to actual costs was not completed until five months after the fiscal year end. As a result, expenditure amounts reported by the CSE program are not based on actual costs. OSA reviewed the annual reconciliation and determined that the variance is not material to the program. OSA selected a non-statistical random sample. Context: The CSE program expended $18.8 million in Federal funds during fiscal year 2022, of which $2.2 million was used for court services. Cause: Management override of controls. The program elected to defer reconciling estimated costs to actual costs until the per minute rate was updated by AOC. Effect: CSE program expenditures for fiscal year 2022, specifically relating to AOC expenditures, were understated by the amount included in the annual reconciling invoice for AOC. Recommendation: We recommend that the Department enhance oversight of established procedures to ensure that CSE is in compliance with Federal regulations. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Division of Support Enforcement and Recovery and the Judicial Branch will modify the language of the cooperative agreement to clarify that all allowable costs subject to federal financial participation are adequately and timely documented. Contact: Jerry Joy, Director, Division of Support Enforcement and Recovery, DHHS, 207-624-6985 (State Number: 22-1128-02)
(2022-078) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-28 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-03)
(2022-079) Title: Internal control over the CCDF Cluster eligibility determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: 2101MECCDF, 2001MECCDF, 2101MECCC5, 2001MECCC3, 2101MECDC6, 2101MECSC6 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The Child Care and Development Fund (CCDF) provides child-care benefits to parents based on financial and program eligibility factors. Eligibility for benefits is determined based on application information from families that is manually entered into the Maine Automated Child Welfare Information System (MACWIS) by Department personnel. Once the application information has been entered, computerized eligibility determinations are processed through MACWIS. There is no secondary review of manually entered application information prior to initiation of computerized eligibility determinations. The Department does not have a process in place to ensure information entered into MACWIS is accurate and in agreement with paper application information prior to eligibility determinations and resulting benefit payments. While the Department does have subsequent monitoring procedures in place, this does not prevent the potential utilization of inaccurate information for eligibility determination. Context: In fiscal year 2022, the Department processed 6,862 family applications and provided $46.3 million in benefits under programs within the CCDF Cluster. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: Inaccurate information manually entered into MACWIS could result in individuals not eligible for services being deemed eligible or eligible individuals being deemed ineligible. Recommendation: We recommend that the Department implement policies and procedures that require a review of manually entered CCDF program application information prior to eligibility determinations. Corrective Action Plan: See F-28 Management?s Response: The Department of Health and Human Services (DHHS) management disagrees with the audit finding that the CCDF program is not meeting requirements identified in 2 CFR 200.303 Internal controls, (a). DHHS believes the current internal controls that are in place provide reasonable assurance that DHHS is managing federal funds in compliance with all regulations. Although ?reasonable? is not defined, DHHS believes it is effectively meeting the Administration for Children and Families? (ACF) expectations, as the funding source, as well as meeting the Child Care Development Fund (CCDF) grant goals and objectives. ACF approved Maine?s FFY22-24 CCDF State Plan which includes a description of OCFS? internal control activities. The potential effect or risk identified by OSA is that without implementing a secondary review of all data entry in the income field, individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible which would result in Improper Payments. In the last quarter of FFY 2022, the Improper Payments rate was 3.37%, well below the federal threshold of 10%. Inaccurate data entry was not noted as a significant cause of Improper Payments. Contact: Todd Landry, Director, Office of Child and Family Services, DHHS, 207-624-7900 Auditor?s Concluding Remarks: The monitoring procedures outlined in Management?s Response do not include specific controls to ensure that the information entered into MACWIS is accurate and in agreement with paper application information prior to making eligibility determinations. The risk that improper payments will be made or that benefits will be denied for families that should have been deemed eligible would be mitigated by establishing a secondary review of manually entered application information. As part of the fiscal year 2022 audit, OSA reviewed the ACF-404 State Improper Payments Report submitted in August 2021. This report identified a 14.49 percent improper payment rate in the cases reviewed. In addition, 24.64 percent of cases reviewed contained erroneous case information. In response to the significant error rates identified in the report, the Department was required to prepare and submit a comprehensive corrective action plan. As stated in the ACF-404, corrective action was initiated in October 2021; therefore, the control deficiencies existed for several months during fiscal year 2022. The improper payment rate of 3.37 percent included in Management?s Response relates to the quarter ending September 30, 2022, which was after the required corrective action and also outside of the audit period. The report submitted during the audit period, along with the required corrective action, validates the necessity for enhanced control procedures to prevent utilization of inaccurate case information in eligibility determinations. The finding remains as stated. (State Number: 22-1114-01)
(2022-078) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-28 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-03)
(2022-079) Title: Internal control over the CCDF Cluster eligibility determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: 2101MECCDF, 2001MECCDF, 2101MECCC5, 2001MECCC3, 2101MECDC6, 2101MECSC6 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The Child Care and Development Fund (CCDF) provides child-care benefits to parents based on financial and program eligibility factors. Eligibility for benefits is determined based on application information from families that is manually entered into the Maine Automated Child Welfare Information System (MACWIS) by Department personnel. Once the application information has been entered, computerized eligibility determinations are processed through MACWIS. There is no secondary review of manually entered application information prior to initiation of computerized eligibility determinations. The Department does not have a process in place to ensure information entered into MACWIS is accurate and in agreement with paper application information prior to eligibility determinations and resulting benefit payments. While the Department does have subsequent monitoring procedures in place, this does not prevent the potential utilization of inaccurate information for eligibility determination. Context: In fiscal year 2022, the Department processed 6,862 family applications and provided $46.3 million in benefits under programs within the CCDF Cluster. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: Inaccurate information manually entered into MACWIS could result in individuals not eligible for services being deemed eligible or eligible individuals being deemed ineligible. Recommendation: We recommend that the Department implement policies and procedures that require a review of manually entered CCDF program application information prior to eligibility determinations. Corrective Action Plan: See F-28 Management?s Response: The Department of Health and Human Services (DHHS) management disagrees with the audit finding that the CCDF program is not meeting requirements identified in 2 CFR 200.303 Internal controls, (a). DHHS believes the current internal controls that are in place provide reasonable assurance that DHHS is managing federal funds in compliance with all regulations. Although ?reasonable? is not defined, DHHS believes it is effectively meeting the Administration for Children and Families? (ACF) expectations, as the funding source, as well as meeting the Child Care Development Fund (CCDF) grant goals and objectives. ACF approved Maine?s FFY22-24 CCDF State Plan which includes a description of OCFS? internal control activities. The potential effect or risk identified by OSA is that without implementing a secondary review of all data entry in the income field, individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible which would result in Improper Payments. In the last quarter of FFY 2022, the Improper Payments rate was 3.37%, well below the federal threshold of 10%. Inaccurate data entry was not noted as a significant cause of Improper Payments. Contact: Todd Landry, Director, Office of Child and Family Services, DHHS, 207-624-7900 Auditor?s Concluding Remarks: The monitoring procedures outlined in Management?s Response do not include specific controls to ensure that the information entered into MACWIS is accurate and in agreement with paper application information prior to making eligibility determinations. The risk that improper payments will be made or that benefits will be denied for families that should have been deemed eligible would be mitigated by establishing a secondary review of manually entered application information. As part of the fiscal year 2022 audit, OSA reviewed the ACF-404 State Improper Payments Report submitted in August 2021. This report identified a 14.49 percent improper payment rate in the cases reviewed. In addition, 24.64 percent of cases reviewed contained erroneous case information. In response to the significant error rates identified in the report, the Department was required to prepare and submit a comprehensive corrective action plan. As stated in the ACF-404, corrective action was initiated in October 2021; therefore, the control deficiencies existed for several months during fiscal year 2022. The improper payment rate of 3.37 percent included in Management?s Response relates to the quarter ending September 30, 2022, which was after the required corrective action and also outside of the audit period. The report submitted during the audit period, along with the required corrective action, validates the necessity for enhanced control procedures to prevent utilization of inaccurate case information in eligibility determinations. The finding remains as stated. (State Number: 22-1114-01)
(2022-078) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-28 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-03)
(2022-079) Title: Internal control over the CCDF Cluster eligibility determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: 2101MECCDF, 2001MECCDF, 2101MECCC5, 2001MECCC3, 2101MECDC6, 2101MECSC6 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The Child Care and Development Fund (CCDF) provides child-care benefits to parents based on financial and program eligibility factors. Eligibility for benefits is determined based on application information from families that is manually entered into the Maine Automated Child Welfare Information System (MACWIS) by Department personnel. Once the application information has been entered, computerized eligibility determinations are processed through MACWIS. There is no secondary review of manually entered application information prior to initiation of computerized eligibility determinations. The Department does not have a process in place to ensure information entered into MACWIS is accurate and in agreement with paper application information prior to eligibility determinations and resulting benefit payments. While the Department does have subsequent monitoring procedures in place, this does not prevent the potential utilization of inaccurate information for eligibility determination. Context: In fiscal year 2022, the Department processed 6,862 family applications and provided $46.3 million in benefits under programs within the CCDF Cluster. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: Inaccurate information manually entered into MACWIS could result in individuals not eligible for services being deemed eligible or eligible individuals being deemed ineligible. Recommendation: We recommend that the Department implement policies and procedures that require a review of manually entered CCDF program application information prior to eligibility determinations. Corrective Action Plan: See F-28 Management?s Response: The Department of Health and Human Services (DHHS) management disagrees with the audit finding that the CCDF program is not meeting requirements identified in 2 CFR 200.303 Internal controls, (a). DHHS believes the current internal controls that are in place provide reasonable assurance that DHHS is managing federal funds in compliance with all regulations. Although ?reasonable? is not defined, DHHS believes it is effectively meeting the Administration for Children and Families? (ACF) expectations, as the funding source, as well as meeting the Child Care Development Fund (CCDF) grant goals and objectives. ACF approved Maine?s FFY22-24 CCDF State Plan which includes a description of OCFS? internal control activities. The potential effect or risk identified by OSA is that without implementing a secondary review of all data entry in the income field, individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible which would result in Improper Payments. In the last quarter of FFY 2022, the Improper Payments rate was 3.37%, well below the federal threshold of 10%. Inaccurate data entry was not noted as a significant cause of Improper Payments. Contact: Todd Landry, Director, Office of Child and Family Services, DHHS, 207-624-7900 Auditor?s Concluding Remarks: The monitoring procedures outlined in Management?s Response do not include specific controls to ensure that the information entered into MACWIS is accurate and in agreement with paper application information prior to making eligibility determinations. The risk that improper payments will be made or that benefits will be denied for families that should have been deemed eligible would be mitigated by establishing a secondary review of manually entered application information. As part of the fiscal year 2022 audit, OSA reviewed the ACF-404 State Improper Payments Report submitted in August 2021. This report identified a 14.49 percent improper payment rate in the cases reviewed. In addition, 24.64 percent of cases reviewed contained erroneous case information. In response to the significant error rates identified in the report, the Department was required to prepare and submit a comprehensive corrective action plan. As stated in the ACF-404, corrective action was initiated in October 2021; therefore, the control deficiencies existed for several months during fiscal year 2022. The improper payment rate of 3.37 percent included in Management?s Response relates to the quarter ending September 30, 2022, which was after the required corrective action and also outside of the audit period. The report submitted during the audit period, along with the required corrective action, validates the necessity for enhanced control procedures to prevent utilization of inaccurate case information in eligibility determinations. The finding remains as stated. (State Number: 22-1114-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-090) Title: Internal control over DG ? PA program cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as is administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Maine Emergency Management Agency (MEMA) did not minimize the time between drawdown and disbursement of Federal funds. In the Office of the State Auditor?s (OSA) testing of 21 drawdowns: ? the cash balance was not taken into consideration when requesting any of the Federal drawdowns; and ? 11 of the disbursements for program costs ranged from 8 to 45 days after the Federal funds were received. OSA selected a judgmental and a non-statistical random sample. Context: During fiscal year 2022, MEMA expended $80.2 million in Disaster Grants ? Public Assistance (DG ? PA) grant funds. Cause: ? Lack of adequate policies and procedures ? Lack of staff resources available to process grant drawdowns, monitor cash balances, and process payments to subrecipients due to the increased number of COVID-19 grants managed by the agency Effect: ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. ? Noncompliance with Federal and State regulations Recommendation: We recommend that the Department develop and implement policies and procedures to ensure that Federal cash is requested based on immediate cash needs which includes consideration of existing cash balances. We also recommend the Department review its staffing needs to ensure there are adequate resources to process and provide supervisory oversight over the increased workload from COVID-19 grants. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. In State Fiscal Year 2023 MEMA started utilizing the Security and Employment Service Center to draw funds and to ensure the drawdown procedure addresses the need to (1) consider previous cash balances before making a drawdown and (2) ensure the period from drawdown to disbursement does not exceed seven days. The new procedure will provide for limited review and testing by MEMA as appropriate. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-02)
(2022-091) Title: Internal control over DG ? PA program special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Disaster Grants ? Public Assistance (DG ? PA) program in the FFATA reporting system for fiscal year 2022. Context: First-tier subawards totaled $56 million under the DG ? PA program in fiscal year 2022. First-tier subawards account for approximately 70 percent of the program?s expenditures. Cause: ? Competing priorities related to an increase in aid requests as a result of COVID-19 ? Lack of resources Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the DG ? PA program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that MEMA allocate resources to fully implement newly established procedures to ensure that subrecipient awards are properly reported as required by Federal program regulations. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. MEMA will ensure FY23 subawards are entered into the FFATA reporting system. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-04)
(2022-092) Title: Internal control over the submission and review of DG ? PA Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Maine Emergency Management Agency Office of the State Controller Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; 2 CFR 200, Appendix XI, Assistance Listing Number 97.036; OMB M-20-26 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID- 19 Emergency Acts expenditures on the SEFA. Therefore, non-federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID- 19 expenditures on the SEFA on a separate line by Assistance Listing number with ?COVID-19? as a prefix to the program name. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Disaster Grants ? Public Assistance (DG ? PA) program, which had both COVID-19 expenditures and non-COVID-19 expenditures during the fiscal year. At the close of the fiscal year, the Department provided a summary of Federal DG ? PA expenditures to OSC; however, the summary did not specifically identify COVID-19 related expenditures under this program. This summary was then used by OSC to compile and prepare the SEFA. Upon preparation, COVID-19 related expenditures were not identified as such in the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, DG ? PA COVID-19 related expenditures were not identified on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: During fiscal year 2022, DG ? PA program expenditures totaled $80.2 million. Of that amount, $79.5 million were COVID-19 related expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-32 Management?s Response: MEMA Response: The Department agrees with this finding. MEMA will implement controls to ensure the accuracy of Assistance Listing Numbers before SEFA data is submitted to OSC. MEMA Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-064, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1502-01)
(2022-090) Title: Internal control over DG ? PA program cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as is administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Maine Emergency Management Agency (MEMA) did not minimize the time between drawdown and disbursement of Federal funds. In the Office of the State Auditor?s (OSA) testing of 21 drawdowns: ? the cash balance was not taken into consideration when requesting any of the Federal drawdowns; and ? 11 of the disbursements for program costs ranged from 8 to 45 days after the Federal funds were received. OSA selected a judgmental and a non-statistical random sample. Context: During fiscal year 2022, MEMA expended $80.2 million in Disaster Grants ? Public Assistance (DG ? PA) grant funds. Cause: ? Lack of adequate policies and procedures ? Lack of staff resources available to process grant drawdowns, monitor cash balances, and process payments to subrecipients due to the increased number of COVID-19 grants managed by the agency Effect: ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. ? Noncompliance with Federal and State regulations Recommendation: We recommend that the Department develop and implement policies and procedures to ensure that Federal cash is requested based on immediate cash needs which includes consideration of existing cash balances. We also recommend the Department review its staffing needs to ensure there are adequate resources to process and provide supervisory oversight over the increased workload from COVID-19 grants. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. In State Fiscal Year 2023 MEMA started utilizing the Security and Employment Service Center to draw funds and to ensure the drawdown procedure addresses the need to (1) consider previous cash balances before making a drawdown and (2) ensure the period from drawdown to disbursement does not exceed seven days. The new procedure will provide for limited review and testing by MEMA as appropriate. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-02)
(2022-091) Title: Internal control over DG ? PA program special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Disaster Grants ? Public Assistance (DG ? PA) program in the FFATA reporting system for fiscal year 2022. Context: First-tier subawards totaled $56 million under the DG ? PA program in fiscal year 2022. First-tier subawards account for approximately 70 percent of the program?s expenditures. Cause: ? Competing priorities related to an increase in aid requests as a result of COVID-19 ? Lack of resources Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the DG ? PA program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that MEMA allocate resources to fully implement newly established procedures to ensure that subrecipient awards are properly reported as required by Federal program regulations. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. MEMA will ensure FY23 subawards are entered into the FFATA reporting system. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-04)
(2022-092) Title: Internal control over the submission and review of DG ? PA Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Maine Emergency Management Agency Office of the State Controller Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; 2 CFR 200, Appendix XI, Assistance Listing Number 97.036; OMB M-20-26 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID- 19 Emergency Acts expenditures on the SEFA. Therefore, non-federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID- 19 expenditures on the SEFA on a separate line by Assistance Listing number with ?COVID-19? as a prefix to the program name. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Disaster Grants ? Public Assistance (DG ? PA) program, which had both COVID-19 expenditures and non-COVID-19 expenditures during the fiscal year. At the close of the fiscal year, the Department provided a summary of Federal DG ? PA expenditures to OSC; however, the summary did not specifically identify COVID-19 related expenditures under this program. This summary was then used by OSC to compile and prepare the SEFA. Upon preparation, COVID-19 related expenditures were not identified as such in the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, DG ? PA COVID-19 related expenditures were not identified on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: During fiscal year 2022, DG ? PA program expenditures totaled $80.2 million. Of that amount, $79.5 million were COVID-19 related expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-32 Management?s Response: MEMA Response: The Department agrees with this finding. MEMA will implement controls to ensure the accuracy of Assistance Listing Numbers before SEFA data is submitted to OSC. MEMA Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-064, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1502-01)
(2022-093) Title: Internal control over expenditure processing needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Homeland Security Grant Program Emergency Management Performance Grant Assistance Listing Number: 97.067; 97.042 Federal Award Identification Number: EMW2018SS00049S01; EMB2019EP00004 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $59,759 under ALN 97.067, Homeland Security Grant Program Likely Questioned Costs: Likely questioned costs cannot be determined due to the variety of expenditures within the population. The projection of questioned costs utilizing the error rate related to the known exception and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Security and Employment Service Center is responsible for processing invoices for multiple State agencies. The Office of the State Auditor (OSA) tested a sample of 60 Federal expenditure transactions to ensure that the expenditure was accurately recorded. OSA found that one quarterly lease payment totaling $59,759 was processed incorrectly. The coding on the invoice indicated that the expenditure should be split coded utilizing Federal and State funds, and that the Federal share should be paid utilizing funds from the Emergency Management Performance Grant. Instead, Homeland Security Grant Program funds were erroneously charged. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department reported expenditures of $2.6 million for the Emergency Management Performance Grant and $4.7 million for the Homeland Security Grant Program. Cause: Lack of supervisory oversight Effect: ? Questioned costs and potential disallowances ? Inaccurate reporting of expenditures Recommendation: We recommend that the Department improve oversight procedures to ensure staff are properly recording expenditures in the correct accounts with the proper utilization of grant funds. Corrective Action Plan: See F-33 Management?s Response: The Department agrees with this finding. The Security and Employment Service Center will continue to provide training for data entry and invoice approval processes. Contact: Marilyn Leimbach, Director, Service and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 22-1000-01
(2022-093) Title: Internal control over expenditure processing needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Homeland Security Grant Program Emergency Management Performance Grant Assistance Listing Number: 97.067; 97.042 Federal Award Identification Number: EMW2018SS00049S01; EMB2019EP00004 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $59,759 under ALN 97.067, Homeland Security Grant Program Likely Questioned Costs: Likely questioned costs cannot be determined due to the variety of expenditures within the population. The projection of questioned costs utilizing the error rate related to the known exception and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Security and Employment Service Center is responsible for processing invoices for multiple State agencies. The Office of the State Auditor (OSA) tested a sample of 60 Federal expenditure transactions to ensure that the expenditure was accurately recorded. OSA found that one quarterly lease payment totaling $59,759 was processed incorrectly. The coding on the invoice indicated that the expenditure should be split coded utilizing Federal and State funds, and that the Federal share should be paid utilizing funds from the Emergency Management Performance Grant. Instead, Homeland Security Grant Program funds were erroneously charged. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department reported expenditures of $2.6 million for the Emergency Management Performance Grant and $4.7 million for the Homeland Security Grant Program. Cause: Lack of supervisory oversight Effect: ? Questioned costs and potential disallowances ? Inaccurate reporting of expenditures Recommendation: We recommend that the Department improve oversight procedures to ensure staff are properly recording expenditures in the correct accounts with the proper utilization of grant funds. Corrective Action Plan: See F-33 Management?s Response: The Department agrees with this finding. The Security and Employment Service Center will continue to provide training for data entry and invoice approval processes. Contact: Marilyn Leimbach, Director, Service and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 22-1000-01
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-022) Title: Internal control over P-EBT Food Benefits needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.542 Federal Award Identification Number: P-EBT Benefits, Maine Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $61,507,558 Likely Questioned Costs: $61,507,558. The full amount of P-EBT Food Benefits issued during fiscal year 2022 are reported as known questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.5; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 1101; State Plan for Pandemic EBT: Children in School, School Year 2020-2021; State Plan for Pandemic EBT: Children in School and Child Care, Summer 2021; State Plan for Pandemic EBT: Children in School/Child Care 2021-2022 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?s financial management systems, including records documenting compliance with the terms and conditions of the Federal award, must be sufficient to determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The State is required to maintain Electronic Benefit Transfer (EBT) issuance, inventory, reconciliation, and other accountability records for a period of three years. The State agency shall control all issuance documents which establish household eligibility while the documents are transferred and processed within the State. The State agency shall use numbers, batching, inventory control logs, or similar controls from the point of initial receipt through the issuance and reconciliation process. The Department must carry out the Pandemic EBT (P-EBT) program, authorized by the FFCRA, in accordance with their State agency plan approved by the U.S. Department of Agriculture (USDA). The State was required to submit plans to the USDA as a precondition for participation in the P-EBT Food Benefits program. The plans outline the proposed framework for operating the program including details on how benefits will be issued, estimates for the total amount of P-EBT benefits and the number of children participating, tentative issuance schedules, and how the State will identify eligible school children and children in child care. Three separate plans were approved by the USDA for P-EBT benefit issuances during fiscal year 2022: School Year 2020- 2021, Summer 2021, and School Year 2021-2022. Condition: The FFCRA authorized the establishment of the P-EBT Food Benefits program in response to the COVID-19 public health emergency. The P-EBT program is administered by the Office for Family Independence (OFI) and provides nutrition assistance for school-age children who would have received free or reduced-price school meals under the National School Lunch Program and School Breakfast Program, and children in child care whose child-care facility was closed or had reduced attendance/hours due to the COVID-19 public health emergency. As outlined in the State?s USDA-approved plans, OFI established an agreement with the Maine Department of Education (MDOE) to provide information required for issuance of P-EBT benefits to eligible children. MDOE provided data on children participating in the Free and Reduced School Lunch Program as the starting point for eligibility determinations under the P-EBT program. OFI utilized this information to apply additional eligibility criteria and build issuance files for P-EBT benefit processing. The agreement between OFI and MDOE established OFI as the responsible party for the maintenance of data used for determining client eligibility and distributing benefits. Federal guidance over the P-EBT program outlines that audit procedures provide assurance that the Department has established and implemented processes to properly determine program eligibility and benefit levels. This includes testing a sample of clients who were issued P-EBT benefits during the fiscal year to verify consistency with the State?s USDA-approved plans and compliance with Federal program requirements. The Office of the State Auditor (OSA) requested original data files containing client and benefit issuance information utilized by OFI during the fiscal year for all P-EBT issuances that occurred. OFI could not provide OSA with these files. Without a population of the original client and benefit information transmitted for P-EBT issuance, OSA is unable to verify compliance with Federal program eligibility and allowability requirements. As a result, all P-EBT benefits issued during fiscal year 2022 totaling $61,507,558 are considered questioned costs. Context: In fiscal year 2022, the State provided approximately 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of supervisory oversight ? Lack of adequate procedures Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure that documentation in support of P-EBT eligibility determinations and allowability of resulting benefit issuances can be provided to corroborate Federal award program expenditures and demonstrate compliance with Federal regulations. Corrective Action Plan: See F-11 Management?s Response: The Department disagrees with this finding. The Department provided the Office of the State Auditor (OSA) with all material used to determine P-EBT benefits. While we acknowledge that due to restrictions imposed on us through a Memorandum of Understanding we have with Maine?s Department of Education (MDOE), which called for the destruction of MDOE's original records, we did provide OSA with the modified records used to determine eligibility benefits. This modification (such as removal of duplicates and address correction) was necessary for ingestion of these records into our Automated Client Eligibility System (ACES), the files were based on an exact replica of MDOE's original data files. These files, the output (client payments) and supporting information necessary for OSA to conduct testing and verify compliance with federal program requirements has been and continues to be available. We believe that the costs are allowable and supported by adequate documentation as required by the Uniform Guidance. Without performing audit testing on the population of payments in question, there is no basis for questioning compliance with eligibility requirements for this population and no basis for questioned costs. It should not be assumed that the entire population is considered ineligible without actually performing audit testing. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department has not provided OSA with all requested documentation used to determine P-EBT benefits as outlined below: 1. Files received from MDOE were not provided: The files containing raw student data provided to OFI from MDOE were destroyed after transfer. OFI contends that this was done in accordance with the MOU in place between OFI and MDOE; however, the MOU further states that OFI should maintain the data used for determining client eligibility and distribution of benefits. In addition, while MDOE could recreate the student data, the files would not be adequate because benefit allotments and client identification information applied by OFI prior to P-EBT benefit issuance would not be included. Auditor's Concluding Remarks are continued on the following page. 2. Modified files based on MDOE data were provided: As noted in Management?s Response, modifications were made to MDOE raw student data files so that the files could be imported into OFI?s database. These modified files were used by OFI to generate benefit issuance files; however, the files contained student data from MDOE but did not provide client identification information or benefit allotment applied to each client. While OFI asserts that the files are based on an exact replica of MDOE?s original data files, OSA is unable to verify that the data presented in the modified files is an exact replica, that the data is accurate, or that all P-EBT eligible clients are included in the modified files. 3. Benefit Issuance files were not provided: OFI could not provide these files to OSA as they were not maintained in accordance with Federal regulations. Issuance files represent the information provided for the establishment and processing of benefits and contain the P- EBT benefit amounts allotted and related eligibility criteria used to issue Federal benefits to each child/client during the fiscal year. These benefit issuance files would have provided OSA an accurate population in order to test Federal compliance requirements for P-EBT eligibility and resulting benefit payment allowability. 4. Paid Benefit files were provided: OFI provided OSA with files containing information on paid benefit issuances during fiscal year 2022, referenced as the output (client payments) files in Management?s Response. While the data fields may be similar to the benefit issuance files used to process eligible clients and related benefit allotments, OSA does not have assurance that the output (client payments) file is accurate, complete, and aligns with the intended P-EBT recipients as established by the benefit issuance files. OFI did not provide OSA with all material used to determine P-EBT benefits. As outlined above, OFI provided modified records rather than original records because OFI did not maintain original issuance files utilized to provide client P-EBT benefits. Federal requirement 7 CFR 274.5 requires that States maintain issuance records for a period of three years. OFI failed to do so, resulting in noncompliance with Federal regulations. Because of OFI?s failure to provide issuance files, OSA was unable to test compliance with P-EBT eligibility and allowability. In accordance with 2 CFR 200.403, costs must be adequately documented. OFI could not provide documentation to support compliance with the terms and conditions of the Federal award to determine that such funds have been used in accordance with Federal program regulations. Therefore, OSA questions all costs for the program. The finding remains as stated. (State Number: 22-1108-05)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-028) Title: Internal control over EBT card security needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued by EPPIC and mailed to the client?s home address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receiving returned cards, record keeping activity, and actual destruction or retransmission of cards. Returned EBT cards are either destroyed or retransmitted and these actions are tracked using two separate spreadsheets. The Department has not implemented segregation of duties within the process to ensure that the activity recorded on the spreadsheets aligns with the activity that occurred. In addition, the existing process does not require that returned EBT cards are secured; returned cards are placed in an open mailbox during processing. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the tracking spreadsheets. Three returned EBT cards were disabled in EPPIC between two and seven months before being recorded as destroyed. Since documentation noting the date of receipt at DHHS is not maintained, OSA was unable to verify the security of the EBT card during the extended periods of inactivity. OSA selected a non-statistical random sample. Additional analytical procedures identified: ? two returned EBT cards which were included on both spreadsheets. Additional audit procedures identified that these cards should have been logged as retransmitted. ? three returned EBT cards which were processed utilizing inaccurate client information. Multiple client names were tied to the same client identification number. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. The Department processed 2,200 returned EBT cards; 790 were recorded as retransmitted and 1,410 were recorded as destroyed. Cause: ? Lack of policies and procedures relating to the security of returned EBT cards ? Lack of segregation of duties Effect: Potential unauthorized use of EBT cards Recommendation: We recommend that the Department implement procedures to maintain adequate security over returned EBT cards, including proper segregation of duties within the process. Corrective Action Plan: See F-13 Management?s Response: The Department agrees with this finding. The Department acknowledges the need to implement a revised SOP governing returned card processing. The revised SOP will include clear segregation of duties to include enhanced management oversight by and between personnel involved. The Department disagrees that adequate security controls are not maintained. Undeliverable EBT cards are delivered to a regional office each business day, and those cards are worked the day they are received. They are placed in the mailbox of a clerical resource that works in the office. The mailbox is located in an area restricted to those that have badge access. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The State is required by Federal regulations to maintain minimum security procedures for EBT cards that include secure storage and limited access. An unsecured mailbox in a location accessible to numerous employees not authorized to handle returned EBT cards is not secure storage or limited access. In addition, because documentation noting the date of receipt of returned EBT cards at DHHS is not maintained, OSA is unable to verify that cards are processed on the date of receipt. The finding remains as stated. (State Number: 22-1108-02)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-039) Title: Internal control over WIC subrecipient monitoring needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 246.19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department shall establish an ongoing management evaluation system which includes the monitoring of local agency operations, the review of local agency financial and participation reports, the development of corrective action plans to resolve program deficiencies, the monitoring of implementation of the corrective action plans, and on-site visits. The results of such actions must be documented. Monitoring of local agencies must encompass evaluation of management, certification, nutrition education, breastfeeding promotion and support, participant services, civil rights compliance, accountability, financial management systems, and food delivery systems. The Department must conduct monitoring reviews of each local agency at least once every two years. Monitoring must include on-site reviews of a minimum of 20 percent of the clinics in each local agency, or one clinic, whichever is greater. Condition: The State contracts with eight local agencies to administer the WIC program. The Department is required to perform management evaluation reviews (MERs) of each local agency at least once every two years. The Department performed full-year MERs for five of the eight local agencies during fiscal year 2022. In the Office of the State Auditor?s (OSA?s) testing: ? three local agencies had full-year MERs, conducted in excess of the two-year timeframe: o one local agency MER due in July 2020 was not performed until September 2021; o one local agency MER due in April 2020 was not performed until May 2021; and o one local agency MER due in October 2020 was not performed until November 2021. ? the financial review portion of the MER was not completed for any of the five local agencies. Of the three remaining local agencies for which the Department did not perform a full-year MER during fiscal year 2022: ? one local agency MER due in November 2021 was not performed during the fiscal year. ? two local agencies were not due for a full-year MER until after audit testing; therefore, OSA did not perform audit testing on these local agency MERs. Context: The Department provided $3.6 million in WIC program funds to eight local agencies in fiscal year 2022. Cause: ? Lack of staff resources available to perform the financial portion of the MERs ? Lack of supervisory oversight Effect: ? Federal programs may not be effectively and efficiently administered. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department: ? implement a process to ensure that the backlog of reviews is completed; ? review its staffing needs to ensure there are adequate resources allocated to the MER process to ensure all portions of the reviews are fully completed; and ? implement additional oversight procedures to ensure all portions of the reviews are fully completed. Corrective Action Plan: See F-16 Management?s Response: The Department agrees with this finding. WIC completed five MERs for FY 22, due to COVID and lack of personnel the three remaining MERs were delayed. WIC is working to catch up on MERs and has begun working with additional staff from DHHS Internal Audit to aid in completing the MER financial component timelier. The training and planning with the DHHS Internal Audit team is underway. All local agencies were monitored for FY22. Contact: Ginger Roberts-Scott, Senior Health Program Manager, DHHS, 207-287-5342 (State Number: 22-1113-03)
(2022-040) Title: Internal control over WIC cash balances needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. Condition: The Office of the State Auditor (OSA) issued finding 2019-021 as a result of procedures performed for the fiscal year 2019 audit. This finding identified that ?Program personnel did not take the existing cash balance into consideration when requesting Federal funds for the Food portion of the WIC grant.? This resulted in an excess cash balance for the Food grant. The finding was repeated as finding 2020-021 for the fiscal year 2020 audit and finding 2021-018 for the fiscal year 2021 audit. In response to these findings, the Department performed a reconciliation of all prior grant awards to determine the cause of the excess cash balance. This reconciliation identified a $1,055,088 discrepancy between the State?s accounting system, WIC reporting. and Federal draws from the 2013 WIC Food grant. Context: The Department calculated a $1,055,088 residual cash balance from WIC Food grant awards issued in 2013. Cause: Lack of adequate recordkeeping and account reconciliation in prior years Effect: The State may be required to return $1,055,088 to the Federal awarding agency. Recommendation: We recommend that the Department contact the Federal awarding agency to resolve this matter. Corrective Action Plan: See F-16 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. To date, considerable effort has been invested in performing grant reconciliations from present back to 2013. Reconciling grants and matching revenues to expenses is labor intensive and takes detailed transaction level analysis. The Department will finalize the reconciliations and take the necessary steps to put the cash balances where they belong. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1113-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-039) Title: Internal control over WIC subrecipient monitoring needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 246.19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department shall establish an ongoing management evaluation system which includes the monitoring of local agency operations, the review of local agency financial and participation reports, the development of corrective action plans to resolve program deficiencies, the monitoring of implementation of the corrective action plans, and on-site visits. The results of such actions must be documented. Monitoring of local agencies must encompass evaluation of management, certification, nutrition education, breastfeeding promotion and support, participant services, civil rights compliance, accountability, financial management systems, and food delivery systems. The Department must conduct monitoring reviews of each local agency at least once every two years. Monitoring must include on-site reviews of a minimum of 20 percent of the clinics in each local agency, or one clinic, whichever is greater. Condition: The State contracts with eight local agencies to administer the WIC program. The Department is required to perform management evaluation reviews (MERs) of each local agency at least once every two years. The Department performed full-year MERs for five of the eight local agencies during fiscal year 2022. In the Office of the State Auditor?s (OSA?s) testing: ? three local agencies had full-year MERs, conducted in excess of the two-year timeframe: o one local agency MER due in July 2020 was not performed until September 2021; o one local agency MER due in April 2020 was not performed until May 2021; and o one local agency MER due in October 2020 was not performed until November 2021. ? the financial review portion of the MER was not completed for any of the five local agencies. Of the three remaining local agencies for which the Department did not perform a full-year MER during fiscal year 2022: ? one local agency MER due in November 2021 was not performed during the fiscal year. ? two local agencies were not due for a full-year MER until after audit testing; therefore, OSA did not perform audit testing on these local agency MERs. Context: The Department provided $3.6 million in WIC program funds to eight local agencies in fiscal year 2022. Cause: ? Lack of staff resources available to perform the financial portion of the MERs ? Lack of supervisory oversight Effect: ? Federal programs may not be effectively and efficiently administered. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department: ? implement a process to ensure that the backlog of reviews is completed; ? review its staffing needs to ensure there are adequate resources allocated to the MER process to ensure all portions of the reviews are fully completed; and ? implement additional oversight procedures to ensure all portions of the reviews are fully completed. Corrective Action Plan: See F-16 Management?s Response: The Department agrees with this finding. WIC completed five MERs for FY 22, due to COVID and lack of personnel the three remaining MERs were delayed. WIC is working to catch up on MERs and has begun working with additional staff from DHHS Internal Audit to aid in completing the MER financial component timelier. The training and planning with the DHHS Internal Audit team is underway. All local agencies were monitored for FY22. Contact: Ginger Roberts-Scott, Senior Health Program Manager, DHHS, 207-287-5342 (State Number: 22-1113-03)
(2022-040) Title: Internal control over WIC cash balances needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: 194ME743W5003, 204ME743W5003, 214ME701W1003, 214ME743W5003, 224ME743W5003, 224ME701W1003 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. Condition: The Office of the State Auditor (OSA) issued finding 2019-021 as a result of procedures performed for the fiscal year 2019 audit. This finding identified that ?Program personnel did not take the existing cash balance into consideration when requesting Federal funds for the Food portion of the WIC grant.? This resulted in an excess cash balance for the Food grant. The finding was repeated as finding 2020-021 for the fiscal year 2020 audit and finding 2021-018 for the fiscal year 2021 audit. In response to these findings, the Department performed a reconciliation of all prior grant awards to determine the cause of the excess cash balance. This reconciliation identified a $1,055,088 discrepancy between the State?s accounting system, WIC reporting. and Federal draws from the 2013 WIC Food grant. Context: The Department calculated a $1,055,088 residual cash balance from WIC Food grant awards issued in 2013. Cause: Lack of adequate recordkeeping and account reconciliation in prior years Effect: The State may be required to return $1,055,088 to the Federal awarding agency. Recommendation: We recommend that the Department contact the Federal awarding agency to resolve this matter. Corrective Action Plan: See F-16 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. To date, considerable effort has been invested in performing grant reconciliations from present back to 2013. Reconciling grants and matching revenues to expenses is labor intensive and takes detailed transaction level analysis. The Department will finalize the reconciliations and take the necessary steps to put the cash balances where they belong. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1113-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-041) Title: Internal control over CACFP claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $11,222 Likely Questioned Costs: Undeterminable. Due to the variety of institution types in the test population and varied meal claim counts, the projection of questioned costs utilizing the error rate related to the known exception and amount tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 226.7, .10, .11, and .16 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Each State agency shall establish procedures for institutions to properly submit claims for reimbursement (CFR). Such procedures must include State agency edit checks, including but not limited to ensuring that payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment, operating days, and approved meal types. Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must conduct reasonable edit checks on the sponsored centers? meal claims. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes (DCHs), and at-risk after school snack programs. Each child and adult care center, including day-care homes, must submit a monthly CFR to the State. CFRs by DCHs are first submitted to Sponsoring Organizations (SOs). SOs are responsible for reviewing and consolidating claims into one comprehensive CFR for submission to the State agency. The State reimburses the SOs and centers for actual meals served based on the CFR. The State utilizes the Child Nutrition Program Web (CNPWeb) system to process monthly claims. System edits were relied upon when the claims were submitted; however, edits were not properly implemented during fiscal year 2022. Furthermore, the Department did not obtain enrollment data from DCHs to set maximum claim reimbursement restrictions when processing claims. The Office of the State Auditor (OSA) tested meal counts claimed on 60 CFRs submitted by SOs and found that 14 contained discrepancies. The SOs? CFRs included meals claimed that exceeded the allowable licensed capacity for facilities included in the consolidated CFR. OSA relied on licensed capacity rather than enrollment data when testing claims, as enrollment data was not obtained by the Department. The meals claimed for reimbursement exceeded licensed capacity for 14 facilities. The amount paid over allowable capacity for these facilities totaled $11,222. The Department could not provide documentation to support that the amount paid in excess of capacity was allowable. OSA deemed monthly reimbursements to one SO to be significant to CACFP. To test a sample of claims for this SO, OSA selected all 12 months of the SO?s CFRs and used a risk-based approach for DCH claims and a random approach for all other claims. OSA selected a non-statistical random sample of claims from all other facilities and SOs for the remaining sample. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $5.7 million was paid through SOs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures that require: ? review, approval and testing of system controls to ensure that edit checks are operating as designed; and ? review of monthly CFRs for accuracy. We further recommend that the Department follow up with SOs to identify unallowable costs and recoup costs if warranted. Corrective Action Plan: See F-16 Management?s Response: The Department disagrees with this finding. As explained to OSA by DOE, DHHS, and USDA, Child Care Centers/Providers can enroll and claim over the licensed capacity. The claim edit check that was in place for SY22 for DCH Providers was Total Monthly Attendance x Approved Meal Types due to the fact that providers can enroll over the licensed capacity. Sponsors have been trained: Total Monthly Attendance equals the number of unique kids who attended during the day, are enrolled in CACFP and who ate at least one meal or snack during the day, then add up those daily totals for the month. To use licensed capacity as an edit check, which OSA did to calculate the costs in question, disallows provider reimbursement for eligible meals. CACFP Total Monthly Attendance is a better edit check as it only calculates attendance for enrolled participants. For the provider claims in question the CACFP Team tested them against the Total Monthly Attendance edit check and none suggest an overclaim. The CACFP Team discovered the missing enrollment edit check on 8/24/22 and immediately submitted a ticket to the web designers. This correction required multiple meetings with the web designers and in-depth system testing. The correction to the edit check was completed on 12/23/22. The claim edit checks now in place are: Attendance x Approved Meal Types (same as before) ? AND- Enrollment x Operating Days x Approved Meal Types. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor?s Concluding Remarks: In accordance with 7 CFR 226.7(k), the Department must establish procedures for facilities to properly submit claims; however, the Department did not have the following procedures in place: ? The Department did not obtain enrollment data to be utilized in the calculation of claims for reimbursement. ? The edit checks that the Department relied upon did not function as intended. The design and implementation of edit checks must ensure that: o payments are only made for approved meal types; and o the number of meals reimbursed does not exceed the total enrollment times the number of operating days times the approved meal types. The Department discovered that the edit checks were not operating as intended on August 24, 2022; however, the Department cannot provide evidence of when the failure occurred as the Department did not test system controls at any time during implementation. Furthermore, the discovery of failed edit checks was identified as a result of an inquiry made by USDA, not by Department controls. OSA also issued finding 2022-033, a material weakness for this system, due to the lack of controls over the system. As stated above and in the Condition of this finding, OSA could not use enrollment data to test the allowability of claims because this data was not obtained by the Department. As an alternative procedure, OSA identified DCHs with CFRs that exceeded licensed capacity and provided this information to the Department for consideration. The Department did not provide documentation to support the allowability of these CFRs, as OSA recognizes Child Care Centers/Providers can enroll and submit CFRs over licensed capacity. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award and must be adequately documented. Because the Department did not provide the requested documentation, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1115-01)
(2022-042) Title: Internal control over CACFP subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes, and at-risk after school snack programs. Child Nutrition Services (CNS) is responsible for monitoring 104 subrecipients that administer these services. Those monitoring procedures include verifying that subrecipients that expend over $750,000 obtain a Single Audit in accordance with Federal regulations. CACFP was previously administered by the State Department of Health and Human Services (DHHS) and subrecipient audits were tracked, received, and reviewed by DHHS? Division of Audit. Prior to fiscal year 2022, the administration of CACFP was moved to the Department of Education (DOE). DOE School Finance and Operations is responsible for the tracking, receipt, and review of subrecipient audits for most programs administered by DOE. CNS asserted that subrecipient audits for private non-profit institutions were received and forwarded to DOE School Finance and Operations for review; however, DOE only stored the audits. Neither CNS nor DOE could provide documentation to support that tracking of subrecipient audit reports was maintained or that reports were received and reviewed. As a result, 19 private non-profit subrecipients that reported receiving over $750,000 in Federal funds and required audits were not reviewed. Context: In fiscal year 2022, $9.3 million in CACFP funds was provided to 104 subrecipients, 51 of which are private non-profit subrecipients and 19 were required to have an audit. Cause: ? Lack of policies and procedures. CNS and DOE School Finance and Operations have not defined roles and responsibilities for tracking, receiving, and reviewing subrecipient audit reports. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that CNS and DOE School Finance and Operations collaborate on implementing policies and procedures that define the roles and responsibilities for tracking, receipt, and review of subrecipient audits. Corrective Action Plan: See F-17 Management?s Response: The Department agrees with this finding. Child Nutrition will implement policies and procedures for the tracking, receipt, and review of audits for subrecipients that expend over $750,000, in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1115-04)
(2022-043) Title: Internal control over CACFP eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $50,275 Likely Questioned Costs: Undeterminable. Likely questioned costs cannot be determined as the projection of questioned costs utilizing the error rate is not tested by dollar amount, but instead is based on eligibility. Criteria: 2 CFR 200.303; 7 CFR 226.2 and .6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State agency must establish application review procedures to determine eligibility of new and renewing institutions, and facilities for which applications are submitted by sponsoring organizations. Required enrollment information includes the number of enrolled participants that are eligible for free, reduced or paid meals. A for-profit center must have more than 25 percent of the children in care eligible for free or reduced price meals. Documentation that each for-profit center application meets the 25 percent definition is required. A pre-approval visit by the State agency to confirm the information in the institution?s application is required for all new applications. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes, and at-risk after school snack programs. Annually, these facilities must submit electronic applications and site information, including current enrollment data, for each location. The Department is required to review the application and determine whether the application should be approved or rejected. Before an application for a new facility is approved, the Department must complete a pre-approval site visit to verify that the information provided by the facility is complete and accurate. The Department has established procedures which require the use of a site visit checklist to ensure that all components of approval are reviewed. One requirement for approval included on the checklist is verification of enrollment data. Claims should not be processed or paid until the entire approval process, including the site visit, has been completed. The Office of the State Auditor (OSA) tested a sample of facilities determined eligible for CACFP and found one approved facility that should have been deemed ineligible. The facility reported a percentage of children eligible for free or reduced-price meals that did not meet the minimum 25 percent requirement for eligibility. Furthermore, the Department could not provide documentation to demonstrate that a pre-approval site visit was completed. The Department processed $50,275 in claims to this facility. OSA selected a non-statistical random sample. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $9.3 million was paid to facilities. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures that require: ? retention of documentation used to support facility applications including pre-approval site visit information and checklists, and ? review and approval of eligibility requirements for both new and annual renewal applications. This will ensure that all applications are accurate and complete and that funds are only provided to eligible facilities. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The Department has put additional procedures in place for the review and approval of eligibility requirements. The documentation to support facility applications was retained but was misplaced at the time of the audit. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor?s Concluding Remarks: Federal regulations state that for costs to be allowable under Federal awards, the costs must be adequately documented. The Department was unable to provide documentation to support information on the application. Therefore, the facility is ineligible and OSA questions the allowability of payments to the facility. The finding remains as stated. (State Number: 22-1115-02)
(2022-044) Title: Internal control over CACFP subrecipient risk evaluation procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child and Adult Care Food Program (CACFP) Assistance Listing Number: 10.558 Federal Award Identification Number: 214ME301N1099, 214ME301N1199, 224ME301N1199, 214ME320N1150, 214ME325N2020, 224ME320N1150, 224ME325N2020, 214ME202H1706, 204ME320N1050 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to 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 procedures. Condition: The Child and Adult Care Food Program (CACFP) provides nutritious foods that contribute to wellness, healthy growth, and development of eligible children and adults receiving care in day-care centers, day-care homes, and at-risk after school snack programs. The Department is responsible for monitoring 104 subrecipients that administer these services. The level of monitoring required by Federal regulations must be determined using a risk-based approach. Subrecipient risk evaluation should include considerations of: ? the subrecipient?s experience with the program, ? the results of subrecipient audits, ? changes in personnel or systems, and ? the extent of Federal awarding agency monitoring procedures. CACFP regulations require the Department to monitor 33.3 percent of total active facilities in each review cycle (annually). In addition, all facilities must be monitored at least once every three years and Sponsoring Organizations (SOs) with 100 or more facilities must be monitored once every two years. SOs provide administration and support for smaller facilities. Department subrecipient monitoring procedures are based on CACFP regulations and do not use the risk-based approach as required by Federal regulations. Context: In fiscal year 2022, CACFP expenditures totaled $9.4 million, of which $9.3 million was provided to 104 subrecipients. Cause: Lack of adequate policies and procedures Effect: ? Noncompliance with Federal regulations ? Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department review and update policies and procedures to incorporate Federal regulations along with program regulations. The risk evaluation process should be documented and retained. Corrective Action Plan: See F-17 Management?s Response: The Department agrees with this finding. The CACFP team will create a risk assessment tool to use in scheduling subrecipient reviews. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1115-03)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-028) Title: Internal control over EBT card security needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued by EPPIC and mailed to the client?s home address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receiving returned cards, record keeping activity, and actual destruction or retransmission of cards. Returned EBT cards are either destroyed or retransmitted and these actions are tracked using two separate spreadsheets. The Department has not implemented segregation of duties within the process to ensure that the activity recorded on the spreadsheets aligns with the activity that occurred. In addition, the existing process does not require that returned EBT cards are secured; returned cards are placed in an open mailbox during processing. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the tracking spreadsheets. Three returned EBT cards were disabled in EPPIC between two and seven months before being recorded as destroyed. Since documentation noting the date of receipt at DHHS is not maintained, OSA was unable to verify the security of the EBT card during the extended periods of inactivity. OSA selected a non-statistical random sample. Additional analytical procedures identified: ? two returned EBT cards which were included on both spreadsheets. Additional audit procedures identified that these cards should have been logged as retransmitted. ? three returned EBT cards which were processed utilizing inaccurate client information. Multiple client names were tied to the same client identification number. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. The Department processed 2,200 returned EBT cards; 790 were recorded as retransmitted and 1,410 were recorded as destroyed. Cause: ? Lack of policies and procedures relating to the security of returned EBT cards ? Lack of segregation of duties Effect: Potential unauthorized use of EBT cards Recommendation: We recommend that the Department implement procedures to maintain adequate security over returned EBT cards, including proper segregation of duties within the process. Corrective Action Plan: See F-13 Management?s Response: The Department agrees with this finding. The Department acknowledges the need to implement a revised SOP governing returned card processing. The revised SOP will include clear segregation of duties to include enhanced management oversight by and between personnel involved. The Department disagrees that adequate security controls are not maintained. Undeliverable EBT cards are delivered to a regional office each business day, and those cards are worked the day they are received. They are placed in the mailbox of a clerical resource that works in the office. The mailbox is located in an area restricted to those that have badge access. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The State is required by Federal regulations to maintain minimum security procedures for EBT cards that include secure storage and limited access. An unsecured mailbox in a location accessible to numerous employees not authorized to handle returned EBT cards is not secure storage or limited access. In addition, because documentation noting the date of receipt of returned EBT cards at DHHS is not maintained, OSA is unable to verify that cards are processed on the date of receipt. The finding remains as stated. (State Number: 22-1108-02)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-025) Title: Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $2,952 Likely Questioned Costs: $7,686,166. Likely questioned costs were projected by dividing the known questioned costs in the sample by total authorized benefits tested to establish an error rate, then applying that error rate to total authorized benefits in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 2302 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 272.10 requires all State agencies to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. The FFCRA established emergency allotments for households participating in SNAP to provide temporary food needs at the applicable maximum allotment for the household size. Condition: The Supplemental Nutrition Assistance Program (SNAP) administered by the Office for Family Independence (OFI) provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all casefile information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, benefit calculations, and notifications when redetermination or revalidation of client eligibility factors is warranted. The Office of the State Auditor (OSA) tested a sample of 60 cases to verify the accuracy of automated SNAP operations utilizing ACES. In two cases, ACES did not properly process casefile information related to social security income in system benefit calculations. Of the two cases, one case resulted in a monthly calculated benefit overpayment of $33 and one case resulted in a monthly calculated benefit overpayment of $2; however, both cases were paid accurate total monthly benefits due to the emergency allotment from the FFCRA which provided the maximum benefit amount for each case. Existing policies and procedures over the automated information system did not identify these errors in system benefit calculations. OSA?s audit procedures also identified one case where household countable assets were inaccurately entered into ACES by OFI personnel. The case should have been deemed ineligible based on household asset limits; however, the case received a monthly benefit amount of $234 for three months and $250 for nine months of fiscal year 2022. The Department does not review information entered into ACES prior to SNAP eligibility determinations and benefit calculations. Known questioned costs total $2,952. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, the State provided approximately 119,000 SNAP eligible clients with $466 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: ? automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations, and ? case information entered into ACES is accurate. Corrective Action Plan: See F-12 Management?s Response: The Department partially agrees with this finding. The Department acknowledges that errors were made in three cases out of the sample of sixty reviewed. However, the Department disagrees with the calculation of the payment error in the third case. Asset limits were eliminated for all categorically eligible households effective January 1, 2022, as part of SNAP rule #212. Therefore, the known questioned costs should only be $1,452. There is an incorrect reference in the condition, in two cases the income type is state supplement income which is issued by the Department and not the Social Security Administration. The Department will continue to review its standard operating procedures to identify opportunities for improvement. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OSA recognizes that categorically eligible household asset limits were eliminated by a State SNAP rule change effective January 1, 2022, based on guidance from the U.S. Department of Agriculture?s Food and Nutrition Service. In the third case noted in Management?s Response above, OFI is incorrectly applying the rule change. The change in eligibility criteria is only applicable to new determinations or redeterminations; therefore, in the case identified by OSA, the applicant would have had to apply for redetermination subsequent to the rule change in order for the asset limitation to be exempted from the eligibility determination process. OSA?s calculation of questioned costs totaling $2,952 for all fiscal year 2022 benefits related to this case is accurate. In regard to the incorrect reference noted in Management?s Response, OFI contends that ?information related to social security income? is an incorrect reference in the Condition; however, OSA maintains that the reference is correct and refers to State Supplemental Payments paid to eligible recipients of social security income. The reference as written, or as OFI suggests, does not change the deficiency reported by OSA which identified that controls relied upon in the automated information system did not identify errors in benefit calculations related to this income component. The finding remains as stated. (State Number: 22-1108-06)
(2022-026) Title: Internal control over the issuance of SNAP benefits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statues, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Department receives date of death (DOD) information from the Maine Center for Disease Control & Prevention (MeCDC) and the Social Security Administration (SSA) on a weekly basis. The Office of the State Auditor (OSA) obtained DOD information from MeCDC and compared it to clients who received Supplemental Nutrition Assistance Program (SNAP) benefits during fiscal year 2022. Of the cases that had benefit issuances after the client?s DOD, OSA identified 998 cases where SNAP benefits were issued in excess of 30 days following the client?s DOD. In 17 of the 998 cases, benefits were issued 140 days or more after the client?s DOD. In 4 of the 17 cases, MeCDC?s reported DOD did not match the DOD documented in the client?s eligibility system case file. Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. Of the 119,000 SNAP clients, 1,875 had a DOD in fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Benefits issued on behalf of deceased clients may go undetected, and may result in unallowable benefit transaction activity. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department improve procedures to ensure that DOD information is received, reviewed, and updated in the eligibility system on a biweekly or monthly basis to prevent incorrect issuances of benefits. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department acknowledges the 17 exceptions cited, 4 of which also contained a data mismatch between our ACES system and Maine?s CDC DAVE system. However, it should be noted that although we agree with the specific exceptions cited, they represent only 17 cases or 0.9% out of a pool of approximately 1,875 deceased clients identified, well within a reasonable margin of error. The reference to 998 cases cited in the finding, where SNAP benefits were issued in excess of 30 days, is inconsistent with the 365-day requirement from FNS. It should be noted that language contained in 7 CFR 272.14(c)(1) only requires that states make a comparison of deceased matched data with no less frequency of once per year. Our date of death procedures includes weekly processing of discrepancy reports from federal agencies as well as monthly crosswalks between ACES and Maine?s CDC. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department receives DOD information from MeCDC and the SSA on a weekly basis, and as noted in Management?s Response, has established policies and procedures that require crossmatching of SNAP client information with DOD information on a more frequent basis than the annual requirement cited above. The 17 cases noted as exceptions had benefits issued 140 days or more past DOD and represented the most egregious cases; however, a total of 998 cases were identified out of 1,875 deceased clients where benefits were issued more than 30 days after DOD. This represents 53% of deceased clients in fiscal year 2022 that should have been identified through weekly processing of discrepancy reports from the SSA and through the monthly data crossmatch between ACES and MeCDC. The established procedures are not effective in preventing incorrect issuances of benefits. The finding remains as stated. (State Number: 22-1108-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-028) Title: Internal control over EBT card security needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: SNAP Benefits, Maine Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued by EPPIC and mailed to the client?s home address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receiving returned cards, record keeping activity, and actual destruction or retransmission of cards. Returned EBT cards are either destroyed or retransmitted and these actions are tracked using two separate spreadsheets. The Department has not implemented segregation of duties within the process to ensure that the activity recorded on the spreadsheets aligns with the activity that occurred. In addition, the existing process does not require that returned EBT cards are secured; returned cards are placed in an open mailbox during processing. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the tracking spreadsheets. Three returned EBT cards were disabled in EPPIC between two and seven months before being recorded as destroyed. Since documentation noting the date of receipt at DHHS is not maintained, OSA was unable to verify the security of the EBT card during the extended periods of inactivity. OSA selected a non-statistical random sample. Additional analytical procedures identified: ? two returned EBT cards which were included on both spreadsheets. Additional audit procedures identified that these cards should have been logged as retransmitted. ? three returned EBT cards which were processed utilizing inaccurate client information. Multiple client names were tied to the same client identification number. Context: In fiscal year 2022, the State provided approximately 119,000 SNAP clients with $466 million in Federal benefits. The Department processed 2,200 returned EBT cards; 790 were recorded as retransmitted and 1,410 were recorded as destroyed. Cause: ? Lack of policies and procedures relating to the security of returned EBT cards ? Lack of segregation of duties Effect: Potential unauthorized use of EBT cards Recommendation: We recommend that the Department implement procedures to maintain adequate security over returned EBT cards, including proper segregation of duties within the process. Corrective Action Plan: See F-13 Management?s Response: The Department agrees with this finding. The Department acknowledges the need to implement a revised SOP governing returned card processing. The revised SOP will include clear segregation of duties to include enhanced management oversight by and between personnel involved. The Department disagrees that adequate security controls are not maintained. Undeliverable EBT cards are delivered to a regional office each business day, and those cards are worked the day they are received. They are placed in the mailbox of a clerical resource that works in the office. The mailbox is located in an area restricted to those that have badge access. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The State is required by Federal regulations to maintain minimum security procedures for EBT cards that include secure storage and limited access. An unsecured mailbox in a location accessible to numerous employees not authorized to handle returned EBT cards is not secure storage or limited access. In addition, because documentation noting the date of receipt of returned EBT cards at DHHS is not maintained, OSA is unable to verify that cards are processed on the date of receipt. The finding remains as stated. (State Number: 22-1108-02)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-030) Title: Internal control over CNC special reporting needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Child Nutrition Cluster (CNC) in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report first-tier subawards totaling $113 million under the CNC. First-tier subawards account for 95 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the CNC was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The USDA Child Nutrition grant funds are paid as expenditure reimbursements rather than awarded by a formula or fixed amount. Reimbursements are processed through a claims system specific to Child Nutrition instead of through the Department?s grant management system which houses grant awards from the USDOE. Due to these factors, a new process must be developed to capture reportable Child Nutrition expenditure data. The Department will develop and implement a procedure for the Child Nutrition Cluster to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-05)
(2022-031) Title: Internal control over Child Nutrition claim reimbursements needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Allowable costs/cost principles Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 210.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible children. The Department is required to review each School Food Authority?s (SFA) claim for reimbursement, on a monthly basis, to ensure that monthly claims are limited to the number of lunches served to eligible children. The Department then reimburses the SFA for actual meals served, based on the SFA?s claim for reimbursement utilizing rates that are programmed in the system. Condition: The Child Nutrition Program (CNP) provides nutritious meals to eligible children in schools, child-care facilities, and summer lunch programs. Each SFA must submit a monthly claim for reimbursement (CFR) to the State through the CNPWeb system that includes actual meals served for the month. The Department then reimburses the SFA for meals served based on the SFA?s CFR utilizing rates that are programmed in the system. The Department relies on the rates that are programmed in the CNPWeb system to ensure that claims are processed correctly. The Department could not provide documentation that CNPWeb system rates and related rate changes were approved, or tested for accuracy. Furthermore, the Department does not have a process in place to review and monitor discrepancies within the CNPWeb system. The Office of the State Auditor (OSA) selected 60 CFRs for testing and found one claim which included two schools. In this claim, meal counts did not accurately reflect the number of meals from the daily point of service for meals served. Instead, total meals were combined and then split equally between the two schools. OSA selected a non-statistical random sample. Context: Child Nutrition Cluster expenditures totaled $118.3 million in fiscal year 2022. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? CFRs may be processed incorrectly, resulting in erroneous reimbursements to SFAs. ? Noncompliance with Federal regulations ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement policies and procedures which require review, approval, and a listing of system changes. We further recommend that oversight of the review and processing of monthly CFRs be implemented. Corrective Action Plan: See F-14 Management?s Response: The Department agrees with this finding. The Department will implement policies and procedures to review and approve CNPWeb system changes. The CFR exception noted in this finding occurred during the period of time that schools were operating the Seamless Summer Option (SSO) and operating in varied circumstances due to the pandemic. In this situation two schools that share a cafeteria were operating one line and counting students as one group rather than by school, and then dividing the meals between the schools. The Summer Food Service Program will offer updated training that will include specific procedures on meal counting and claiming for schools that may operate this provision. Additionally, a policy will be created for the oversight of claiming procedures during the SSO operations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-02)
(2022-032) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-04)
(2022-033) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-14 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-06)
(2022-034) Title: Internal control over the submission of CNC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Education Administrative and Financial Services State Bureau: Child Nutrition Services General Government Service Center Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.502; 2 CFR 200.510; 2 CFR 200, Appendix XI, OMB M- 20-26; Section 2202(a) Families First Coronavirus Response Act (FFCRA) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended, including distribution or use of food commodities, and must be based on when the activity related to the Federal award occurs. For a cluster of programs, the schedule must list individual Federal programs within the cluster. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19 Emergency Acts expenditures on the SEFA. Therefore, non-Federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID-19 expenditures on the SEFA on a separate line by Assistance Listing number (ALN) with ?COVID-19? as a prefix to the program name. Several waivers were issued by Food and Nutrition Services under section 2202(a) of the FFCRA. These waivers allowed School Food Authorities to participate in various programs and be paid at higher rates, and allowed schools to be reimbursed for all meals served to students regardless of eligibility status. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. The Department submitted exhibits to OSC that: ? incorrectly reported expenditures for ALN 10.553 School Breakfast Program ($23.5 million) and ALN 10.556 Special Milk Program ($8,354) under ALN 10.555 National School Lunch Program. ? reported the amount of noncash assistance that the State was entitled to use ($5.9 million), rather than the amount that was actually used ($4.8 million). Furthermore, the entire amount was incorrectly reported under ALN 10.555 when a portion of this should have been reported under ALN 10.559 Summer Food Service Program for Children. ? did not specifically identify COVID-19 related expenditures for the Child Nutrition Cluster (CNC) on the State?s fiscal year 2022 SEFA; this has since been corrected. Furthermore, CNC expenditures increased significantly due to waivers issued under the FFCRA. These expenditures were issued under existing grant awards and therefore cannot be easily identified. As a result, these expenditures are not separately reported on the SEFA as COVID-19 expenditures. Context: In fiscal year 2022, CNC expenditures totaled $118 million. Of that amount: ? $1.7 million was expended under a COVID-19 specific grant. ? $4.8 million was expended as distributions of noncash food commodities. ? expenditures for the School Breakfast Program and Special Milk Program were $23.5 million and $8,354, respectively. Cause: ? Lack of adequate policies and procedures relating to Department SEFA submissions to OSC ? Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to ensure accurate preparation, review and submission of SEFA information to OSC. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. The Department will report expenditures for the School Breakfast Program and Special Milk Program under the individual ALNs rather than including those expenditures in the broader ALN 10.555. The Department will report noncash assistance at the amount actually used rather than the amount authorized for use. The Department will add a note to the SEFA report indicating any COVID-19 expenditures that cannot be isolated due to waivers. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1203-01)
(2022-035) Title: Internal control over CNC subrecipient audit procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: The Department of Education (DOE) School Finance and Operations is responsible for tracking and reviewing subrecipient audits on behalf of the Child Nutrition Cluster (CNC). CNC program subrecipients include schools that are provided Federal funds to support food service programs. The Office of the State Auditor (OSA) requested a list of subrecipients that required audits in fiscal year 2022 from DOE to test compliance with Federal regulations. OSA independently queried the State?s accounting system to develop a separate list for comparison and to ensure completeness. OSA compared DOE?s tracking to OSA?s generated list and found two subrecipients that were excluded from DOE?s tracking. DOE?s tracking excluded two private schools that received Federal funds in excess of the $750,000 Single Audit requirement; therefore, the audits for the two schools were not received or reviewed. Context: In fiscal year 2022, $113 million was provided to 254 subrecipients. Approximately 120 subrecipients were required to have an audit in accordance with Federal regulations. Cause: ? Lack of adequate policies and procedures. DOE policies do not provide guidance over tracking audits of private schools. ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. Recommendation: We recommend that the Department implement policies and procedures to ensure that audit reports for all subrecipients, including private schools, receiving over $750,000 in Federal awards are tracked, received, and reviewed. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition will create policies and procedures to collect, track, and review single audits for private schools receiving over $750,000 in Federal awards. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-04)
(2022-036) Title: Internal control over Child Nutrition donated food inventory needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster (COVID-19) Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: 214ME300L1603, 214ME301N1099, 214ME301N1199, 224ME301N1199, 224ME300L1603, 214ME102H1703, 224ME902N8903 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 250.12 and .19 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The distributing agency must ensure that a separate inventory record of donated foods is maintained. The distributing agency?s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. Condition: The Department receives donated foods from the U.S. Department of Agriculture (USDA) for distribution to School Food Authorities (SFAs). In fiscal year 2022, the Department implemented a new inventory system for tracking donated foods. The system, as implemented, did not provide the level of detail needed for accurate tracking of inventory. Limitations included lack of data fields to record: ? lost or damaged goods, and ? the date for all stages of the inventory process (order date, receipt date, distribution date). The Office of the State Auditor (OSA) tested 12 donated food items for proper recording. OSA reviewed documentation of USDA food requests, inventory receipts, and distributions made to SFAs against information in the inventory system. Inventory calculated by OSA did not align with system-generated inventory records for all 12 items. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department distributed approximately $5 million of donated foods to SFAs. Cause: ? Lack of a reliable inventory tracking system ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Inaccurate reporting of noncash Federal awards on the Schedule of Expenditures of Federal Awards ? Theft, loss, or damage of inventory may go undetected. Recommendation: We recommend that the Department: ? continue to enhance the inventory tracking system, and ? increase oversight of donated food tracking and the inventory systems used. This will ensure inventory records are accurate and complete. Corrective Action Plan: See F-15 Management?s Response: The Department agrees with this finding. Child Nutrition has purchased software and is in the implementation stages of the project. This year, the Food Distribution Program has done supplemental record keeping, supplementing the detail within the system. We will continue to improve the tracking and enhance the inventory system. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 22-1203-06)
(2022-037) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-15 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-05)
(2022-038) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-16 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-08)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-014) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0907-01)
(2022-021) Title: Internal control over valuing estimates for the allowances for uncollectible unemployment insurance receivables needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor (MDOL) Administrative and Financial Services (DAFS) State Bureau: Unemployment Compensation, a Unit of MDOL Security and Employment Service Center, a Unit of DAFS Office of the State Controller, a Unit of DAFS Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547; State Administrative and Accounting Manual, Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Agencies are required by statute to prepare, submit, and retain auditable supporting documentation for all information submitted to the Office of the State Controller (OSC) for financial reporting purposes. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Accounting estimates used in the financial statements require the use of judgment by management which should be based on actual knowledge and experience with historical and current data. Annual review of these estimates and the circumstances that give rise to the estimates is necessary. Condition: The Maine Department of Labor (MDOL) utilizes the outsourced ReEmployME information system for processing and storage of data related to the Unemployment Insurance (UI) program. ReEmployME stores extensive financial and programmatic data, including records of balances owed to the State by individuals and employers. Detailed reports of receivables balances are necessary for financial reporting purposes. MDOL cannot provide an accounts receivable report from ReEmployME containing records for each debtor as of June 30, 2022. The related valuations of the allowances for uncollectible UI receivables reported on the State?s financial statements are not supported. The estimated allowances for uncollectible accounts related to Federal and State benefit overpayment receivables, unemployment tax receivables, and UI penalties and interest receivables are all based on the same assumption. Receivables outstanding for more than one year are automatically deemed uncollectible, rather than applying assumptions supported by data and evidence for each classification of receivables. OSC?s review and analysis of the estimated allowances is not sufficient. The supporting documentation for this analysis does not include management?s considerations of historical data, detailed collections activity, or current economic trends. The Office of the State Auditor (OSA) performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables is reasonable. OSA?s analysis found that collection activity did not support OSC?s allowance. As a result, an audit adjustment was proposed to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million. OSC did not record this proposed audit adjustment. Context: UI receivables for the Employment Security Trust Fund (ESTF) totaled $112.5 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $63.2 million. This results in management?s presentation of $49.3 million in net ESTF UI receivables, not including interest and penalties. Federal Fund UI receivables totaled $56.9 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $10.2 million. This results in management?s presentation of $46.7 million in net Federal UI receivables. As of June 30, 2022, a receivable for interest and penalties related to UI totaling $61.8 million was included in the Other Special Revenue Fund, reduced by the estimated allowance for uncollectible accounts of $59 million. The allowance represents 95.5% of the total balance, and results in management?s net presentation of approximately $2.8 million in UI receivables for interest and penalties. Cause: ? Management has identified long-term and ongoing information system limitations that have not been resolved which inhibit functionality for receivables reporting. ? Lack of documented effective policies and procedures to: o generate and retain detailed UI receivables information for financial reporting purposes; and o support management?s considerations in developing the estimated allowances for uncollectible accounts. ? Lack of supervisory oversight Effect: ? Potential misstatement of ESTF UI receivables balances, the allowances for uncollectible accounts which are also separately disclosed in Note 6 of the financial statements, and the resulting net receivables balances. ? Federal Fund receivables are overstated by an estimated $44.4 million in the financial statements, and the allowance for uncollectible accounts separately disclosed in Note 6 of the financial statements is understated by an estimated $44.4 million. Recommendation: We recommend that MDOL and the Security and Employment Service Center generate and retain detailed receivables reports, including collections activity, throughout the fiscal year for proper financial reporting of receivables balances. The reports should also be utilized to establish a formal, documented method to estimate the allowances for uncollectible accounts. The methodology should incorporate current and historical collection experience and other factors used to support professional judgment. MDOL personnel should perform a detailed secondary review of the methodology and calculated estimates for the allowances for uncollectible accounts. In addition, we recommend that OSC request and analyze detailed collection data from MDOL as part of their review of the estimated allowances to reduce the risk of management bias and to prove the allowances are reasonable, complete, and accurate. Corrective Action Plan: See F-11 Management?s Response: The Departments agree that detailed receivables reports should be generated and retained during the fiscal year. The OSC will provide guidance to the Department of Labor (DOL) to develop a reporting mechanism that will provide a more detailed analysis of the activity of the receivable balances. The OSC is responsible for determining the estimates in the financial statements. The accounting estimates are based on subjective, as well as, objective factors; therefore, professional judgement is required to estimate an amount for uncollectible receivables using an aging methodology, which is considered a common and acceptable method within the industry. Management's opinion is that this method is not overly sensitive to variations, is consistent with historical patterns and is not overly subjective or susceptible to bias. Applying this methodology, the OSC and the DOL accumulate relevant, sufficient, and reliable data on which to base the estimate. Additionally, we believe that the estimate is presented in conformity with the applicable accounting principles and that disclosure is adequate. The OSC recently performed a five-year trend analysis of historical collections with information provided by the DOL. The OSC compared the percentages and the assumptions used in the past and updated the reserve percentages accordingly. The OSC will continue to use the rolling year trend analysis with the actual collection data, as provided by the DOL, to update the reserve percentage. The DOL implemented a new system and the OSC will continue to review the reserve process to ensure the allowance continues to be valued properly. Contact: Stacey Thomas, Financial Management Coordinator, OSC, 207-626-8431 Auditor?s Concluding Remarks: OSA performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables was reasonable. This analysis resulted in a proposed audit adjustment to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million; therefore, OSC?s methodology for determining the allowance is not reasonable and additional considerations, such as collections data, need to be made. We continue to recommend that MDOL and OSC work together to improve financial reporting to ensure that the State?s financial statements are reasonable, complete, and accurate. The finding remains as stated. (State Number: 22-0308-01)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-014) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0907-01)
(2022-021) Title: Internal control over valuing estimates for the allowances for uncollectible unemployment insurance receivables needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor (MDOL) Administrative and Financial Services (DAFS) State Bureau: Unemployment Compensation, a Unit of MDOL Security and Employment Service Center, a Unit of DAFS Office of the State Controller, a Unit of DAFS Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547; State Administrative and Accounting Manual, Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Agencies are required by statute to prepare, submit, and retain auditable supporting documentation for all information submitted to the Office of the State Controller (OSC) for financial reporting purposes. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Accounting estimates used in the financial statements require the use of judgment by management which should be based on actual knowledge and experience with historical and current data. Annual review of these estimates and the circumstances that give rise to the estimates is necessary. Condition: The Maine Department of Labor (MDOL) utilizes the outsourced ReEmployME information system for processing and storage of data related to the Unemployment Insurance (UI) program. ReEmployME stores extensive financial and programmatic data, including records of balances owed to the State by individuals and employers. Detailed reports of receivables balances are necessary for financial reporting purposes. MDOL cannot provide an accounts receivable report from ReEmployME containing records for each debtor as of June 30, 2022. The related valuations of the allowances for uncollectible UI receivables reported on the State?s financial statements are not supported. The estimated allowances for uncollectible accounts related to Federal and State benefit overpayment receivables, unemployment tax receivables, and UI penalties and interest receivables are all based on the same assumption. Receivables outstanding for more than one year are automatically deemed uncollectible, rather than applying assumptions supported by data and evidence for each classification of receivables. OSC?s review and analysis of the estimated allowances is not sufficient. The supporting documentation for this analysis does not include management?s considerations of historical data, detailed collections activity, or current economic trends. The Office of the State Auditor (OSA) performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables is reasonable. OSA?s analysis found that collection activity did not support OSC?s allowance. As a result, an audit adjustment was proposed to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million. OSC did not record this proposed audit adjustment. Context: UI receivables for the Employment Security Trust Fund (ESTF) totaled $112.5 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $63.2 million. This results in management?s presentation of $49.3 million in net ESTF UI receivables, not including interest and penalties. Federal Fund UI receivables totaled $56.9 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $10.2 million. This results in management?s presentation of $46.7 million in net Federal UI receivables. As of June 30, 2022, a receivable for interest and penalties related to UI totaling $61.8 million was included in the Other Special Revenue Fund, reduced by the estimated allowance for uncollectible accounts of $59 million. The allowance represents 95.5% of the total balance, and results in management?s net presentation of approximately $2.8 million in UI receivables for interest and penalties. Cause: ? Management has identified long-term and ongoing information system limitations that have not been resolved which inhibit functionality for receivables reporting. ? Lack of documented effective policies and procedures to: o generate and retain detailed UI receivables information for financial reporting purposes; and o support management?s considerations in developing the estimated allowances for uncollectible accounts. ? Lack of supervisory oversight Effect: ? Potential misstatement of ESTF UI receivables balances, the allowances for uncollectible accounts which are also separately disclosed in Note 6 of the financial statements, and the resulting net receivables balances. ? Federal Fund receivables are overstated by an estimated $44.4 million in the financial statements, and the allowance for uncollectible accounts separately disclosed in Note 6 of the financial statements is understated by an estimated $44.4 million. Recommendation: We recommend that MDOL and the Security and Employment Service Center generate and retain detailed receivables reports, including collections activity, throughout the fiscal year for proper financial reporting of receivables balances. The reports should also be utilized to establish a formal, documented method to estimate the allowances for uncollectible accounts. The methodology should incorporate current and historical collection experience and other factors used to support professional judgment. MDOL personnel should perform a detailed secondary review of the methodology and calculated estimates for the allowances for uncollectible accounts. In addition, we recommend that OSC request and analyze detailed collection data from MDOL as part of their review of the estimated allowances to reduce the risk of management bias and to prove the allowances are reasonable, complete, and accurate. Corrective Action Plan: See F-11 Management?s Response: The Departments agree that detailed receivables reports should be generated and retained during the fiscal year. The OSC will provide guidance to the Department of Labor (DOL) to develop a reporting mechanism that will provide a more detailed analysis of the activity of the receivable balances. The OSC is responsible for determining the estimates in the financial statements. The accounting estimates are based on subjective, as well as, objective factors; therefore, professional judgement is required to estimate an amount for uncollectible receivables using an aging methodology, which is considered a common and acceptable method within the industry. Management's opinion is that this method is not overly sensitive to variations, is consistent with historical patterns and is not overly subjective or susceptible to bias. Applying this methodology, the OSC and the DOL accumulate relevant, sufficient, and reliable data on which to base the estimate. Additionally, we believe that the estimate is presented in conformity with the applicable accounting principles and that disclosure is adequate. The OSC recently performed a five-year trend analysis of historical collections with information provided by the DOL. The OSC compared the percentages and the assumptions used in the past and updated the reserve percentages accordingly. The OSC will continue to use the rolling year trend analysis with the actual collection data, as provided by the DOL, to update the reserve percentage. The DOL implemented a new system and the OSC will continue to review the reserve process to ensure the allowance continues to be valued properly. Contact: Stacey Thomas, Financial Management Coordinator, OSC, 207-626-8431 Auditor?s Concluding Remarks: OSA performed a review and analysis of collections activity specific to Federal benefit overpayment receivables to determine if OSC?s estimate for uncollectible UI receivables was reasonable. This analysis resulted in a proposed audit adjustment to increase the estimated allowance for uncollectible receivables in the Federal Fund by $44.4 million; therefore, OSC?s methodology for determining the allowance is not reasonable and additional considerations, such as collections data, need to be made. We continue to recommend that MDOL and OSC work together to improve financial reporting to ensure that the State?s financial statements are reasonable, complete, and accurate. The finding remains as stated. (State Number: 22-0308-01)
(2022-045) Confidential finding, see below for more information Title: Internal control over UI claim payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Labor State Bureau: Unemployment Compensation Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $19,278 Likely Questioned Costs: Likely questioned costs totaling $2.7 million were projected within each entitlement program by dividing the identified ineligible benefit payments in our sample by the total benefit payments tested to establish an error rate, then applying that error rate to each entitlement program?s benefit payment totals for fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 20 CFR 615.8; Middle Class Tax Relief and Job Creation Act of 2012; Social Security Act (SSA) Title III, Section 303; Unemployment Insurance Program Letter (UIPL) No. 5-13; Coronavirus Aid, Relief, and Economic Security (CARES) Act; 26 MRSA 1190 through 1199; Consolidated Appropriations Act, 2021; American Rescue Plan Act of 2021 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. A State administering UI must have State laws and policies in place that are consistent with Federal provisions and required by 20 CFR 615.8; the Middle Class Tax Relief and Job Creation Act of 2012; SSA Title III, Section 303; and UIPL No. 5-13, as follows: ? Standards for claim filing and processing including appeals and reviews, communication with claimants and employers, eligibility standards and disqualifications, and Interstate Benefit Payments and agreements ? Standards for reasonable work search criteria and policies requiring performance of internal audits of work search activity ? Standards for program integrity outlining procedures for identification and recovery of overpayments and penalties, including recovery through offset of future benefit payments The State of Maine?s statutory requirements for UI program benefits are outlined in 26 MRSA 1190 through 1199. In March 2020, as a nationwide response to the effects of the COVID-19 pandemic, including rapidly increasing unemployment rates, the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act created three temporary Federal unemployment compensation entitlement programs that continued in fiscal year 2022, as follows: ? Pandemic Unemployment Assistance (PUA) provides UI benefits for individuals who are not eligible for regular UI benefits and are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19. Covered individuals include the self-employed, independent contractors, part-time workers, and others not normally eligible to receive regular UI benefits. ? Pandemic Emergency Unemployment Compensation (PEUC) provides an additional 13 weeks of UI benefits for unemployed workers who have exhausted regular UI benefits. This was extended to 24 weeks through enactment of the Consolidated Appropriations Act signed into law at the end of December 2020. ? Federal Pandemic Unemployment Compensation (FPUC) initially provided an additional $600 weekly to all unemployed workers receiving traditional UI benefits, PUA, or PEUC. This was changed to $300 weekly in December 2020 through enactment of the Consolidated Appropriations Act. The Federal American Rescue Plan Act signed into law in March 2021 granted additional extensions of the PUA, PEUC, and FPUC programs through September 2021. Condition: Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Department Controls: The Department has complementary controls in place over claimant eligibility, including: ? internal work search audits performed by MDOL personnel required for one percent of weekly claims, and ? establishment of a Benefits Quality Control Unit tasked with investigating a prescribed number of UI paid claims and denied claims each week. Audit Testing Results: As part of the initial eligibility determination process, State UI law requires MDOL to confirm claimant separation from employment through correspondence with a claimant?s most recent employer. OSA?s test of 60 regular UI claimants? initial eligibility identified one claimant where a separation letter was not sent to the most recent employer as required. As part of the continuing eligibility determination process, State UI law requires a weekly claim to be filed and work search activities to be reported. In OSA?s test of 60 regular UI claimants? continuing eligibility, the following exceptions were noted: ? Three claimants reported the same work search activity for multiple claims ranging from three to eighteen weeks without the existence of further verifiable details. Controls were not in place to require additional work search verification procedures prior to continued benefit payments. OSA did not report the underlying benefits paid as questioned costs. ? One claimant did not report work search activities for a period of three weeks. OSA reported benefits totaling $1,476 paid to the claimant during this time as known questioned costs. As part of the PUA eligibility determination process, Federal program regulations require that claimants provide proof of employment information. In OSA?s test of 60 PUA claimants, nine claimants were deemed ineligible to receive benefits by MDOL. These claimants were required to provide proof of employment within 90 days of notification from MDOL. MDOL did not notify two of the claimants until May 2021, six of the claimants until July 2021, and one of the claimants until February 2022. As a result, claimants who did not provide proof of employment received benefits in fiscal year 2021 and fiscal year 2022. Benefits paid to these ineligible claimants totaled $14,832 in fiscal year 2022; OSA reported this amount as known questioned costs. As part of the PEUC eligibility determination process, Federal program regulations require the claimant to have exhausted regular UI benefits. In OSA?s test of 60 PEUC claimants, one claimant received benefits before the exhaustion of regular UI benefits. Regular UI benefits were exhausted prior to fiscal year 2022 and all ineligible PEUC benefit payments occurred in the prior year; therefore, OSA did not report questioned costs for fiscal year 2022. OSA selected non-statistical random samples. Data Analytics: Additional audit procedures included obtaining information from Maine Vital Records and performing cross-matches with benefit payment data from ReEmployME. These procedures identified that: ? based on an analysis of claimant dates of death, five claimants received UI benefit payments from various entitlement programs after their dates of death. These benefit payments totaled $2,970 through the end of fiscal year 2022. OSA reported this amount as known questioned costs. ? based on an analysis of claimant dates of birth, the following claimants received UI benefits during fiscal year 2022: ? 2 claimants under the age of 10. State UI law does not restrict benefit payments based on age. Employment and wage documentation required for eligibility were provided by both claimants so MDOL did not deem the claimants ineligible; however, the system did not identify the claimants for further review prior to benefit issuance. OSA did not report questioned costs for these claimants. ? 290 claimants over the age of 80, including: o 275 claimants between the ages of 80 and 89; and o 15 claimants between the ages of 90 and 99. MDOL does not have adequate procedures in place to identify and review claimant dates of death as well as the reasonableness of claimant age prior to the issuance of benefit payments. Context: The UI program provided $98.5 million in State UI benefits and $163.3 million in Federal UI benefits during fiscal year 2022. Cause: ? Lack of resources ? Lack of adequate controls over initial and continuing claimant eligibility determinations ? Lack of adequate supervisory oversight over information system application controls ? Lack of adequate policies and procedures to identify and review claimant dates of death prior to the issuance of benefit payments Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances ? Potential liability, and applicable interest, due to the Federal government for claims paid to ineligible or fraudulent Federal UI benefit claimants Recommendation: We recommend that the Department enhance policies and procedures to require: ? that eligibility requirements are met and adequately supported prior to issuance of benefit payments. ? implementation of additional information system application controls. ? incorporation of data analytics and data cross-matching procedures to prevent or detect payments to ineligible claimants. This will provide assurance that payments to ineligible claimants are prevented, or detected and corrected, in a timely manner. Corrective Action Plan: See F-17 Management?s Response: The Department partially agrees with this finding. The finding states that the Department?s system does not ensure that benefit payments to ineligible claimants are prevented or detected prior to the issuance of payments. The Department collects the necessary information to determine initial and ongoing eligibility. It is important to note that both federal and state law prohibit the withholding of payment from someone who is already receiving benefits when a potential eligibility issue is identified. The Department must gather additional information and issue a written determination, which also includes notification of the right to appeal the determination. In the meantime, payments must be made. If the Department issues a determination that the individual was ineligible, an overpayment is created, and repayment is required. The finding states that the Department has insufficient controls in place to detect claimants using the same work search activities for multiple claims. The work search activity provided by the three claimants in question was participation in a CareerCenter-led job fair, or other accepted work search activity, on multiple claims. The Department agrees with the recommendation of additional controls in this area and expects to implement additional controls before the end of SFY 23. The finding furthermore states that one claimant filed claims without a work search for three consecutive weeks. A review of the claim determined the claimant appropriately received a documented work search warning for the first week, but no decision was rendered on the two subsequent weeks due to a staff training error. The Department agrees with these testing results of the finding. The finding furthermore states that the Department erred in paying benefits to individuals collecting on the Pandemic Unemployment Assistance (PUA) program. The Continued Assistance Act (CAA), released in December 2020, added a new requirement to the PUA program. To continue to receive PUA benefits, claimants were required to provide documentation substantiating employment or self-employment, or the planned commencement of employment or self-employment within 21 or 90 days (depending on the date of initial PUA filing) from the date of the guidance, or when first noticed by the Department. This last part serves as USDOL?s acknowledgement that it would take time to implement the changes into existing functionality and systems. In Maine, the first notices went out on May 6, 2021. Two of the claimants listed received their notice on this day, with one receiving their denial decision on day 90, and one on day 93, preventing further benefits. The Department agrees with the testing results in the latter case. Five claimants received their notice on July 7, 2021, and a denial 90 days later, properly preventing further benefits. The Department disagrees with the testing results of the finding for the claimants cited in July. The remaining two cases cited were claimants who filed a PUA initial claim, and PUA weekly claims in 2020, prior to the release of the CAA. However, payments for these weeks were not processed until 2021 and 2022. At that time, notices to provide proof of employment were sent, followed by a denial decision for failure to respond/provide adequate proof. However, no overpayment was created because the week ending dates of the weeks paid all pre-dated the implementation of the CAA and therefore were not subject to overpayment. The Department disagrees with these testing results of the finding. The finding also states the Department needs additional controls for claims filed after a claimant?s date of death, as well as the claimant?s age when filing a claim for benefits. Though the Department has made significant enhancements to the Vital Statistic crossmatch process, it agrees that the current crossmatch with the state?s Vital Records office that identifies deceased claimants should be reviewed further. That said, there are timing differences that cannot be avoided, and overpayments cannot be completely ruled out. Overpayments, penalties, and prosecutions are all considered when it is determined someone falsely filed for benefits using a deceased person?s information. Regarding the age of the individual filing for benefits, additional controls were implemented during SFY 23, with additional controls still under review for further enhancement and implementation. Contact: Laura Boyett, Director, Bureau of Unemployment Compensation, DOL, 207-621-5156 Auditor?s Concluding Remarks: Management?s Response states that the Department collects necessary information to determine initial and continuing claimant eligibility prior to benefit issuance; however, exceptions included in the finding were the result of a failure to solicit or collect required documentation in support of eligibility for claimants prior to the issuance of benefit payments. For PUA eligibility, OSA acknowledges that the December 2020 implementation of the requirement for PUA claimants to provide proof of employment did place a significant burden on MDOL to develop related controls timely and that guidance from U.S. DOL stated that benefit payments should not be held while awaiting documentation; however, MDOL did not implement necessary controls to address this Federal requirement until several months later. As a result, procedures were not in place to prevent payments to ineligible claimants from December 2020 to May 2021, and claimants that should have been deemed ineligible subsequent to December 2020 continued to receive benefits into fiscal year 2022. OSA acknowledges that timing differences for weekly claim filings and claimant dates of death cannot be entirely prevented; however, the exceptions included in the finding concern the timeliness and frequency of data cross-matching procedures, and the initiation of appropriate follow up action in order to prevent overpayments. The finding remains as stated. (State Number: 22-1302-01)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-048) Title: Internal control over ERA Program special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Economic and Community Development State Bureau: Commissioner?s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Emergency Rental Assistance Program (COVID-19) Assistance Listing Number: 21.023 Federal Award Identification Number: ERA0299, ERA0434, ERAE0515, ERAE0563 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report its first-tier subaward under the Emergency Rental Assistance (ERA) Program in the FFATA reporting system for fiscal year 2022. Context: In fiscal year 2022, the Department was required to report a first-tier subaward totaling $152 million to the only subrecipient of the ERA Program. First-tier subawards account for 100 percent of the program?s fiscal year 2022 expenditures. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the ERA Program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional policies and procedures, including increased supervisory oversight, to ensure subawards meeting or exceeding the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-19 Management?s Response: The Department agrees with this finding. Due to the evolving reporting requirements for the Emergency Rental Assistance program, the Department did not originally identify the FFATA requirements as applicable and did not submit accordingly. Currently, the existing policies and procedures have been modified to ensure that from this point forward, FFATA reporting is completed for all subawards that meet or exceed the first-tier threshold. Contact: Deborah Johnson, Director, Office of Community Development, DECD, 207-624-9817 (State Number: 22-1695-01)
(2022-049) Title: Internal control over ERA Program subrecipient monitoring needs improvement Prior Year Findings: None State Department: Economic and Community Development State Bureau: Commissioner?s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Emergency Rental Assistance Program (COVID-19) Assistance Listing Number: 21.023 Federal Award Identification Number: ERA0299, ERA0434, ERAE0515, ERAE0563 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited as required. Condition: In fiscal year 2022, the Department passed through Emergency Rental Assistance (ERA) Program funds to one subrecipient. Subrecipient monitoring procedures included providing Federal award information in grant award agreements and frequent communication with the subrecipient; however, the Department: ? did not adequately design and document ongoing monitoring activities to ensure that the subaward was used for authorized purposes and in compliance with Federal regulations. ? could not provide a documented review of the subrecipient?s audit report to verify compliance with Subpart F of 2 CFR 200 and to ensure that the subrecipient took timely and appropriate action on all deficiencies pertaining to the Department?s subaward. The Office of the State Auditor reviewed the subrecipient?s audit report covering a portion of fiscal year 2022 and noted findings related to the subaward that should have been considered in relation to the risk of subrecipient noncompliance and planned monitoring procedures. ? did not require submission of detailed expenditure information with the subrecipient?s requests for reimbursement of ERA Program funds. A summary spreadsheet outlining actual and projected expenditures for second-tier subrecipients was the only support provided to the Department with each reimbursement request. Context: The Department provided $245.8 million to the ERA subrecipient during fiscal year 2022. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: ? Noncompliance with Federal regulations ? Lack of ongoing subrecipient monitoring procedures could result in subrecipient noncompliance. Recommendation: We recommend that the Department develop and implement additional policies and procedures to require: ? ongoing subrecipient monitoring during the use of the subaward; ? receipt and documented review of subrecipient audits in order to consider the effects of audit results on subrecipient risk assessment and planned monitoring procedures; and ? receipt of detailed documentation in support of subrecipient reimbursement requests prior to payment approval. Corrective Action Plan: See F-19 Management?s Response: The Department agrees with this finding. Due to the Emergency Rental Assistance Program coming to a close, the Department plans on utilizing a consultant to assist with close out procedures that will ensure these subrecipient funds were used for authorized purposes and in compliance with Federal regulations. Additionally, the Department will ensure that the review of subrecipient audit reports are sufficiently documented. Contact: Deborah Johnson, Director, Office of Community Development, DECD, 207-624-9817 (State Number: 22-1695-02)
(2022-050) Title: Internal control over ERA Program reporting needs improvement Prior Year Findings: None State Department: Economic and Community Development State Bureau: Commissioner?s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Emergency Rental Assistance Program (COVID-19) Assistance Listing Number: 21.023 Federal Award Identification Number: ERA0299, ERA0434, ERAE0515, ERAE0563 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; Consolidated Appropriations Act, 2021, Section 501(g) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must report the total number of participating households receiving Emergency Rental Assistance (ERA) of any kind and the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households on a monthly basis. Additionally, the Department must submit quarterly reports providing financial and performance data regarding grantee administration of their ERA projects and capture program design in addition to program status data elements. Condition: The Department contracts with a subrecipient to administer the ERA Program. A Memorandum of Understanding (MOU) between the Department and the subrecipient outlines the following: ? The subrecipient is responsible for preparation of all required reporting under the ERA Program. ? The Department is responsible for certification and submission of all reports prepared by the subrecipient. The Office of the State Auditor (OSA) reviewed ERA Program reporting and found that the subrecipient prepared, certified, and submitted 24 monthly and 9 quarterly performance reports during fiscal year 2022. The Department did not review, approve, or certify any of the fiscal year 2022 reports prior to submission to the Federal government. The reports were only provided to the Department subsequent to submission. The Department provided OSA with all monthly and quarterly reports for the fiscal year; however, the Department was unable to provide: ? documentation to support amounts reported on the State?s fiscal year 2022 ERA Program performance reports. ? documentation of review and approval of performance reports prepared by the subrecipient, as they were prepared, certified, and submitted with no oversight by the Department. The Department has no assurance that the ERA Program information prepared by the subrecipient and submitted to the Federal government on behalf of the State is accurate or properly supported. Context: In fiscal year 2022, the Department provided $245.8 million to the ERA subrecipient. Cause: ? Lack of supervisory oversight ? Lack of adequate policies and procedures Effect: The Department did not properly oversee the ERA Program as required by Federal regulations. ERA Program reports submitted to the Federal government are not properly supported and may not be accurate as documentation is not reviewed or maintained by the Department. Recommendation: We recommend that the Department implement additional policies and procedures to require a documented review and approval of all ERA Program reports prepared by the subrecipient prior to Department certification and submission. This will ensure that information reported to the Federal government is accurate and complete. Corrective Action Plan: See F-19 Management?s Response: The Department agrees with this finding. The Department will document the review and approval of all ERA program reports prepared by the subrecipient prior to Department certification and submission. Contact: Deborah Johnson, Director, Office of Community Development, DECD, 207-624-9817 (State Number: 22-1695-03)
(2022-051) Title: Internal control over CSLFRF expenditures needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: SLFRP0144 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $51,482,644 Likely Questioned Costs: $51,482,644 Criteria: 2 CFR 200.303; 2 CFR 200.403; 2 CFR 200.302; Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Interim Final Rule, Federal Register Volume 86, Issue 93 (May 17, 2021) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?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 determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The CSLFRF Interim Final Rule states that recipients may make deposits into the State account of the Unemployment Trust Fund up to the level needed to restore the pre-pandemic balances of such account as of January 27, 2020, or to pay back advances received for the payment of benefits between January 27, 2020, and May 17, 2021, given the close nexus between Unemployment Trust Fund costs, solvency of Unemployment Trust Fund systems, and pandemic economic impacts. Condition: As part of the American Rescue Plan Act, the State was advanced $997 million in Federal CSLFRF to support its response to and recovery from the COVID-19 public health emergency. In response, Public Law 2021, Chapter 483, Section D-1 was enacted and states that ?notwithstanding any provision of law to the contrary, the State Controller shall transfer $80 million from the Federal Expenditures Fund ? ARP State Fiscal Recovery balance to the Department of Labor, Unemployment Compensation Fund no later than November 30, 2021.? To support the allowability of the $80 million transfer under the Public Health and Economic Impacts use category, the Maine Department of Labor (MDOL) prepared an analysis that compared the balance between January 25, 2020 ($502,137,397) and September 30, 2021 ($405,167,938). Under this use category, transfers to the Unemployment Trust Fund are only allowable up to the level needed to restore the Trust Fund to the pre-pandemic balance as of January 27, 2020. The Department of Administrative and Financial Services (DAFS) reviewed and approved the calculation for reasonableness and allowability. As a result, DAFS transferred $80 million from the Federal Fund to the State Unemployment Trust Fund on November 30, 2021. Using the State?s Trust Fund Balance Reports, the Office of the State Auditor (OSA) compared the January 27, 2020, balance ($499,966,386) to the September 30, 2021, balance ($471,449,030). The $28,517,356 difference represents the amount allowed to restore the State Unemployment Trust Fund to the pre-pandemic balance as of January 27, 2020, under the Public Health and Economic Impacts use category. MDOL and DAFS were unable to provide: ? documentation supporting the $405.2 million balance on September 30, 2021, used to substantiate allowability of the $80 million transfer, and ? a justification of why the Trust Fund Balance Reports were not used in the calculation. Therefore, the $80 million transfer exceeds the amount needed to restore the State Unemployment Trust Fund to the pre-pandemic balance by $51,482,644 under the Public Health and Economic Impacts use category. Context: The $80 million transfer to the State?s Unemployment Trust Fund represents approximately 66 percent of the $121.5 million in CSLFRF expenditures during fiscal year 2022. Cause: Misinterpretation of Federal guidance Effect: ? Noncompliance with Federal regulations ? Known questioned costs and potential disallowances Recommendation: We recommend that MDOL and DAFS review expenditures charged to CSLFRF, including the above-noted expenditure, to ensure that costs are adequately documented to support that only allowable costs are funded by CSLFRF. Corrective Action Plan: See F-19 Management?s Response: We disagree with this finding. Likewise, we are unable to determine why the auditor has identified a questioned cost or includes a recommendation that only allowable costs are funded by CSLFRF. The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category. Questioned costs are defined by the Uniform Guidance, 2CFR ? 200.1, Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; In this case, there was no violation of statute, regulation or terms of the federal award for the SLFRF program (ALN 21.027). Regardless of category, the transfer of $80M to the UI Trust is considered an allowable cost under the program; thus, there is no portion of the transfer that is considered unallowable and no basis for a questioned cost. (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or All parties agree that the transfer is allowable under the SLFRF program (ALN 21.027) and adequate documentation has been provided to support that determination. (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. All parties agree that the cost appears reasonable; consequently, there is no amount that should be questioned. All documentation to support the allowability of this transfer was provided to the auditor for review. There were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category; however, we provided documentation to support that the total amount was eligible under the Revenue Loss - Provision of Government Services use category. Although we have identified a weakness in internal control over compliance, there was no actual noncompliance. Consequently, there is no cost that is considered unallowable; therefore, there should be no questioned cost. DOL Contact: Kimberly Smith, Deputy Commissioner, DOL, 207-621-5096 DAFS Contact: Frank Wiltuck, Director of Internal Audit, OSC, 207-626-8420 Auditor?s Concluding Remarks: Management asserts, ?The transfer of $80 million to the Unemployment Trust Fund is completely allowable, with a portion categorized under the Public Health and Economic Impacts use category and a portion under the Revenue Loss - Provision of Government Services use category.? However, OSC did not provide documentation to support this statement, as described below. OSA initially questioned the allowability of the $80 million transfer in November 2022. In the following months and in response to OSA?s request for all documentation to corroborate the allowability of the transfer, OSC only provided evidence to support the transfer under the CSLFRF Public Health and Economic Impacts use category. OSA reviewed this support and identified errors in the calculation for the allowable amount of the transfer under the CSLFRF Public Health and Economic Impacts use category. As a result of these errors, OSA notified the Department that a finding would be issued and costs of $51,482,644 would be questioned. In response to the finding communication from OSA, OSC initiated discussion of alternative use categories for CSLFRF under which the transferred amount would be considered allowable. OSC proposed recategorizing the unallowable portion of the transfer from the Public Health and Economic Impacts use category to the Provision of Government Services use category of CSLFRF. Though the unallowable portion of the transfer (the questioned costs) may ultimately be allowable under this alternative use category, the costs, at the time of the audit, were incurred under the Public Health and Economic Impacts use category. Management states, ?we are unable to determine why the auditor has identified a questioned cost? and has provided the definition of Questioned Costs as defined by 2 CFR 200.1. However, OSC?s interpretation implies that OSA should allow changes in supporting documentation that do not align with the original intent of the usage of funds. The recategorization of the unallowable costs to another use category may be part of OSC?s corrective action plan; however, the documentation provided as audit evidence does not properly support $51,482,644 in CSLFRF Public Health and Economic Impacts costs. OSA cannot allow the Department to alter supporting documentation to avoid questioned costs. If OSA permitted the State to alter supporting documentation whenever OSA identified unallowable costs, there would never be any questioned costs to report. This is not the intent of 2 CFR 200.1. Managements acknowledges ?there were errors in the original calculation of the total amount eligible under the Public Health and Economic Impacts category? and ?we have identified a weakness in internal control over compliance,? which is the basis of this finding. The finding remains as stated. (State Number: 22-1699-01)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-057) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: ? a description and identification number; ? the source of funding, including the Federal Award Identification Number; ? who holds title and the acquisition date; ? the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; ? the location, use and condition; and ? any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned equipment purchases. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for equipment purchases identified and approved in the application. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. During fiscal year 2022, the Department did not have policies and procedures in place to track SAU equipment purchases reimbursed with ESF; therefore, the Department does not have assurance that: ? a complete and accurate record of all equipment purchased with ESF funds was maintained by each SAU. ? proper monitoring activities surrounding subrecipient compliance with Federal regulations for equipment and real property management were conducted. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be in compliance with equipment and real property management requirements. ? Assets purchased with ESF funds may not be properly safeguarded or maintained. Recommendation: We recommend that the Department implement policies and procedures to ensure that a complete and accurate record of all equipment purchased under ESF is maintained by the Department and by each SAU. This record should be utilized during subrecipient monitoring activities to verify subrecipient compliance with Federal regulations. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. The Office of Federal Emergency Relief Programs will develop and implement policies and procedures so that complete and accurate records of all equipment purchased under ESF will be maintained by each SAU and the Department when collected during subrecipient monitoring. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 (State Number: 22-1235-06)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-057) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: ? a description and identification number; ? the source of funding, including the Federal Award Identification Number; ? who holds title and the acquisition date; ? the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; ? the location, use and condition; and ? any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned equipment purchases. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for equipment purchases identified and approved in the application. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. During fiscal year 2022, the Department did not have policies and procedures in place to track SAU equipment purchases reimbursed with ESF; therefore, the Department does not have assurance that: ? a complete and accurate record of all equipment purchased with ESF funds was maintained by each SAU. ? proper monitoring activities surrounding subrecipient compliance with Federal regulations for equipment and real property management were conducted. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be in compliance with equipment and real property management requirements. ? Assets purchased with ESF funds may not be properly safeguarded or maintained. Recommendation: We recommend that the Department implement policies and procedures to ensure that a complete and accurate record of all equipment purchased under ESF is maintained by the Department and by each SAU. This record should be utilized during subrecipient monitoring activities to verify subrecipient compliance with Federal regulations. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. The Office of Federal Emergency Relief Programs will develop and implement policies and procedures so that complete and accurate records of all equipment purchased under ESF will be maintained by each SAU and the Department when collected during subrecipient monitoring. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 (State Number: 22-1235-06)
(2022-052) Title: Internal control over ESF expenditures needs improvement Prior Year Findings: None State Department: Education State Bureau: Office of Federal Emergency Relief Programs Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $620,676 Likely Questioned Costs: Likely questioned costs totaling $6,364,627 were projected by dividing the known questioned costs in our sample by total expenditures tested to establish an error rate, then applying that error rate to total expenditures paid in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law No. 116-136; Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, Public Law No. 116-260; American Rescue Plan (ARP) Act, Public Law No. 117-2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The CARES Act, CRRSA Act, and ARP Act authorized the creation of the Education Stabilization Fund and its subprograms. Governors and State Education Agencies (SEAs) must demonstrate that costs incurred by governors, SEAs, and subrecipients are allowable under the relevant statutory and regulatory provisions, assurances, and certification and agreement, and consistent with the purpose of the Education Stabilization Fund, which is to prevent, prepare for, and respond to COVID-19. Condition: Education Stabilization Funds (ESF) were authorized by Federal legislation for use by school administrative units (SAUs) within the State to prevent, prepare for, and respond to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned projects. Applications included detail on costs and the necessity of costs as a result of the COVID-19 pandemic. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for expenditures identified and approved in the application. The Office of the State Auditor (OSA) tested 60 SAU reimbursement requests to ensure that only allowable costs were charged to ESF and found that: ? one request for reimbursement contained an invoice for the purchase and installation of a new hot water boiler. The boiler project description stated that the school was in need of a new hot water boiler because it was likely that the existing equipment would not pass inspection after the current year. The cost of the new boiler and installation totaled $154,800. Replacing a boiler that was likely not going to pass upcoming inspections would have been a necessary project of the SAU independent of the COVID-19 pandemic. ? one request for reimbursement contained an invoice for replacing two sections of roof at a district elementary school. The roofing project description stated that the roof replacement was needed because they had leaks that may start to impact air quality and a functioning roof was needed in order to have students in person full-time. The cost of the roofing job totaled $54,915. Replacing a leaking roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. Both subrecipients had an approved application on file with OFERP listing these specific projects. OSA selected a non-statistical random sample. OSA expanded testing as a result of the exceptions noted above. OSA reviewed the applications on file for the two SAUs and found a roof replacement project totaling $410,961. The SAU documented the roofing project as necessary to address concerns that could contribute to the possible spread of COVID-19. Replacing a roof would have been a necessary project of the SAU independent of the COVID-19 pandemic. The supporting documentation provided by the SAUs and maintained by the State does not demonstrate that the above costs are consistent with the purpose of ESF which is to prevent, prepare for, and respond to COVID-19; as a result, questioned costs total $620,676. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Misinterpretation of Federal regulations ? Lack of explicit Federal guidance surrounding ESF allowability Effect: ? Noncompliance with Federal regulations ? Known questioned costs ? Potential future questioned costs and disallowances Recommendation: We recommend that the Department review all ESF expenditures to ensure that only allowable costs are charged to the Federal program. Expenditures that do not meet ESF criteria for allowability should be transferred out of ESF. Corrective Action Plan: See F-20 Management?s Response: The Maine Department of Education (MDOE) disagrees with the identified questioned costs. The Office of Federal Emergency Relief Programs (OFERP) utilized guidance provided by the U.S. Department of Education (grantor) and conferred in writing with Maine?s assigned U.S. Department of Education program officer throughout the Education Stabilization Fund application review process. The Maine Department of Education?s OFERP provided the auditor with the grantor?s guidance which clearly states that the questioned costs were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Throughout the application review process, OFERP utilized ESF federal statutory language and the grantor?s published guidance to determine allowability. Once funding applications were approved, SAUs requested reimbursement from the OFERP for the approved costs outlined in the school administrative unit (SAU) application. The OFERP reviewed SAU reimbursement requests and provided payment for approved expenses. The ESF costs outlined in this finding were allowable, reasonable, and necessary to prepare, prevent, and respond to the COVID-19 pandemic. Documentation provided by the grantor supports the determinations made by the Maine Department of Education. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 Auditor?s Concluding Remarks: Supporting documentation provided by the Department for the reimbursements totaling $620,676 related to two roof replacements and a boiler replacement did not provide adequate evidence that these expenditures were necessary and in line with the allowability criteria of ESF, which is to prevent, prepare for, or respond to COVID-19. While all subrecipients had approved applications on file listing these specific projects, additional allowability considerations should have been made and documented prior to reimbursement. All questioned costs reported by OSA are related to projects that, based on the support maintained by the Department, would have been necessary for the SAU to address independent of the COVID-19 pandemic. Without documentation and evidence to substantiate that the expenditures are for needs directly arising from the public health emergency, OSA cannot determine that the reimbursements were in fact to prepare for, prevent, and respond to COVID-19; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1235-04)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-056) Title: Internal control over ESF special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System (FSRS). In the Office of the State Auditor?s (OSA) test of 36 subawards that exceeded the first-tier subaward threshold, the following FFATA reporting exceptions were identified: ? One subaward listed an incorrect project description; and ? One subaward totaling $683,794 was incorrectly reported for Education in the Unorganized Territories (EUT). This is not a subrecipient award as the EUT is governed by the State. In addition, the Department could not provide evidence that a secondary review of FFATA reports occurred prior to submission in the FSRS to ensure that information entered was accurate and complete. The Department implemented a secondary review process in February 2022; however, this was not in place when ESF subawards were reported in September and October 2021. OSA selected a non-statistical random sample. Context: During fiscal year 2022, the Department obligated $371 million in first-tier subawards to 177 subrecipients of ESF. All 177 subrecipients had awards that exceeded the first-tier subaward threshold for reporting in the FSRS. Cause: ? Lack of supervisory review ? Lack of policies and procedures prior to February 2022 Effect: Inaccurate, incomplete, or untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department maintain policies and procedures to ensure all subawards that meet or exceed the first-tier threshold are reported accurately, timely, and in accordance with Federal regulations. Documentation of supervisory review for each FFATA report submitted in the FSRS should be retained as required by policies and procedures established in February 2022. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. Beginning in February 2022, the Department implemented a procedure for reviewing FFATA reports for accuracy prior to submission. Where this finding relates to FFATA reports prior to February 2022, and the Department has taken steps to address the previous finding, management feels that no further corrective action is necessary. Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 (State Number: 22-1235-02)
(2022-057) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Education State Bureau: Commissioner?s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: ? a description and identification number; ? the source of funding, including the Federal Award Identification Number; ? who holds title and the acquisition date; ? the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; ? the location, use and condition; and ? any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. SAUs were required to submit applications to the Office of Federal Emergency Relief Programs (OFERP) under the Department of Education outlining identified uses for ESF including planned equipment purchases. Program coordinators within OFERP were responsible for reviewing and approving applications submitted by SAUs. Once there was an approved application on file, SAUs could submit reimbursement requests to the Department for equipment purchases identified and approved in the application. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. During fiscal year 2022, the Department did not have policies and procedures in place to track SAU equipment purchases reimbursed with ESF; therefore, the Department does not have assurance that: ? a complete and accurate record of all equipment purchased with ESF funds was maintained by each SAU. ? proper monitoring activities surrounding subrecipient compliance with Federal regulations for equipment and real property management were conducted. Context: In fiscal year 2022, ESF expenditures totaled $126.4 million, of which $120.6 million was paid to subrecipient SAUs. Cause: ? Lack of policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Subrecipients may not be in compliance with equipment and real property management requirements. ? Assets purchased with ESF funds may not be properly safeguarded or maintained. Recommendation: We recommend that the Department implement policies and procedures to ensure that a complete and accurate record of all equipment purchased under ESF is maintained by the Department and by each SAU. This record should be utilized during subrecipient monitoring activities to verify subrecipient compliance with Federal regulations. Corrective Action Plan: See F-21 Management?s Response: The Department agrees with this finding. The Office of Federal Emergency Relief Programs will develop and implement policies and procedures so that complete and accurate records of all equipment purchased under ESF will be maintained by each SAU and the Department when collected during subrecipient monitoring. Contact: Shelly Chasse-Johndro, Director of OFERP, DOE, 207-458-3180 (State Number: 22-1235-06)
(2022-054) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-03)
(2022-055) Confidential finding, see below for more information Title: over the and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-21 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0909-07)
(2022-053) Title: Internal control over submission and review of ESF Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Education Administrative and Financial Services State Bureau: Commissioner?s Office Office of the State Controller Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425B, 84.425C, 84.425D, 84.425R Federal Award Identification Number: S425C200004, S425C210004, S425D200004, S425D210004, S425U210004, S425W210020, S425R210044, S425B200039 Compliance Area: Reporting Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding from the Education Stabilization Fund (ESF) under ALN 84.425. The U.S. Department of Education awarded ESF funds to grantees, including the State, under 23 subprograms. An alphabetic character at the end of ALN 84.425 is used to delineate each subprogram. Each subprogram has its own funding requirements and compliance requirements. At the close of the fiscal year, the Department provided a summary of ESF expenditures to OSC; however, the summary did not properly identify ESF subprograms and related expenditures. This summary was then used by OSC to compile and prepare the SEFA. The summary of ESF expenditures resulted in the following errors: ? Expenditures under subprogram 84.425B Discretionary Grants: Rethink K-12 Education Model Grants, were erroneously reported under 84.425R Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools. As a result, subprogram 84.425B was originally omitted from the SEFA. ? Subprogram 84.425C Governor?s Emergency Education Relief was originally missing its subprogram alphabetic character designation and was incorrectly labeled as 84.425. This alphabetic character designation is required for SEFA and Federal reporting purposes. ? The Department transferred allowable prior year ESF expenditures to the Coronavirus Relief Fund (CRF) during fiscal year 2022. These amounts reduced the current year expenditures of the program, and as a result, ESF program totals were understated on the SEFA by $1.4 million. Subsequent OSC review procedures were not designed to detect and correct the errors outlined above. As a result, the errors were included on the State?s fiscal year 2022 SEFA provided to the Office of the State Auditor (OSA) for audit purposes. Context: The 2022 SEFA originally reported expenditures under ESF subprograms totaling $125 million; however, this included the following errors: ? Subprogram 84.425R reported expenditures totaling $4.8 million. This amount incorrectly included $1.7 million of expenditures that should have been listed separately under 84.425B. ? $1.4 million of prior year ESF expenditures were transferred out of current year SEFA totals to the CRF, resulting in an understatement of fiscal year 2022 ESF expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program or subprogram and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-20 Management?s Response: DOE Response: The Department agrees with this finding. The Department will be mindful to detect typographical errors through an increased level of scrutiny when conducting the review. DOE Contact: Nicole Denis, Director of Finance, DOE, 207-530-2161 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, OSA recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1235-01)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-058) Title: Internal control over ICA program subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must: ? include Federal award information in the subaward that enables subrecipients to identify the source of the Federal award, as well as certain subrecipient information. ? evaluate each subrecipient?s risk of noncompliance with Federal regulations for the purposes of determining the appropriate level of subrecipient monitoring to be performed. ? monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Department is responsible for ensuring subrecipients comply with Federal requirements by: ? reviewing subrecipient grant awards to ensure accurate Federal award identification information is included to allow subrecipients to accurately identify the source of the subawards; ? utilizing risk evaluations to determine the appropriate level of monitoring activities to be performed that correspond to the results of those risk evaluations; and ? performing ongoing monitoring activities to ensure that the subaward was used for authorized purposes and in compliance with Federal regulations. The Office of the State Auditor (OSA) tested compliance with subrecipient monitoring requirements for 7 subrecipients and found that: ? 3 subawards did not properly identify required Federal award information: o 2 subawards were missing the subrecipient?s Data Universal Numbering System (DUNS) number. o 2 subawards reported the wrong Assistance Listing Number. ? 2 subrecipients were deemed ?higher risk? after the Department performed a risk evaluation; however, the Department could not provide documentation to support that additional monitoring activities were performed in response to the ?higher risk? designation. ? 80 performance reports were required to be completed and submitted for fiscal year 2022 to ensure subaward performance goals are achieved. o 47 reports were provided to the auditor but lacked evidence of supervisory review. o 33 reports could not be provided. ? 52 financial reports were required to be completed and submitted for fiscal year 2022 to ensure subawards are used for approved budgeted expenditures. o 32 reports were provided to the auditor but lacked evidence of supervisory review. o 20 reports could not be provided. The Department could not provide any further documentation to support subrecipient monitoring procedures occurred during fiscal year 2022 to ensure that the subaward was used for authorized purposes. OSA selected a non-statistical random sample. Context: The Department provided $2.5 million to 35 Immunization Cooperative Agreements (ICA) program subrecipients in fiscal year 2022. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Lack of ongoing subrecipient monitoring procedures could result in undetected subrecipient noncompliance. Recommendation: We recommend that the Department implement policies and procedures to ensure that: ? subaward agreements include all required information and are accurate; ? risk evaluations are utilized to determine the appropriate level of monitoring activities to be performed; and ? ongoing subrecipient monitoring is completed during the subaward and documented. This will ensure that the Department is in compliance with subrecipient monitoring requirements. Corrective Action Plan: See F-22 Management?s Response: The Department agrees with this finding. The Department initiated these subrecipient agreements to ensure equitable access to COVID-19 vaccines. As a result of these agreements, Maine had one of the best vaccine roll-outs in the country, including among Black, Indigenous, and People of Color. Some of the information requested by OSA was unable to be accessed because it was saved in individual staff files which were moved when an employee was transferred or left employment with the Department. The Department will implement processes in SFY23 to improve record keeping for these subawards including: 1) reviewing subaward agreements using a checklist to ensure they include all the required information and are accurate; 2) ensuring that risk evaluations are utilized to determine the appropriate level of monitoring; and 3) improving and centralizing subrecipient monitoring documentation within the Office of Population Health Equity (OPHE) at Maine CDC. Contact: Ian Yaffe, Director, Office of Population Health Equity, DHHS, 207- 592-1481 (State Number: 22-1118-03)
(2022-059) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-22 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-02)
(2022-060) Title: Internal control over the submission of ICA Schedule of Expenditures of Federal Awards reporting needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Immunization Cooperative Agreements (ICA) program. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal ICA expenditures to OSC which included noncash vaccine awards; however, the summary included the wrong fiscal year?s noncash vaccine award data. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. As a result, ICA expenditures were inaccurately reported on the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: In fiscal year 2022, noncash flu vaccines totaling $169,070 were not reported to OSC by the Department for inclusion in the SEFA. Cause: Lack of adequate internal control relating to Department SEFA submissions to OSC Effect: ? Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. ? Inaccurate information was reported in the fiscal year 2022 Annual Comprehensive Financial Report. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-22 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, when the request is sent from the Financial Service Center to the MIP Senior Health Program Manager (SHPM), the SHPM will request the information from the MIP Planning and Research Associate. The SHPM will be required to review the requested data prior to the response, which will include fiscal year accuracy of the reports. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to CDC?s Immunization program for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with CDC?s Immunization?s program to verify that the information provided was accurate. This will be completed by 12/31/2023. Contact: Jessica Shiminski, Health Program Manager, Maine Center for Disease Control & Prevention, DHHS, 207-287-7087 (State Number: 22-1118-01)
(2022-061) Title: Internal control over ICA program cash management needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services Service Center (DHHS SC) is responsible for the drawdown of funds for the Immunization Cooperative Agreements (ICA) program. The DHHS SC requests Federal funds in order to reimburse ICA program expenditures. In December 2021, $478,459 of program expenditures that had previously been reimbursed under the ICA program were recategorized as eligible Coronavirus Relief Fund expenditures. The DHHS SC did not immediately return the funds that were received for these expenditures and continued to draw additional Federal funds under the ICA grant. As a result, the State?s Federal cash balances for the ICA program exceeded the State?s administratively feasible threshold of seven business days for approximately seven months. Context: In fiscal year 2022, there were approximately 160 Federal grant drawdowns totaling $8.7 million for the ICA program. Cause: ? Lack of adequate procedures to capture all program activity ? Lack of supervisory oversight Effect: The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC develop and implement policies and procedures to address identification and timely return of excess grant funds to the Federal government. Corrective Action Plan: See F-23 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. The grant daily files will be reconciled for the Immunization grants from 2021 through current by December 31, 2023 in order to timely identify and return excess grant funds. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1118-02)
(2022-062) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-23 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-01)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-058) Title: Internal control over ICA program subrecipient monitoring procedures needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must: ? include Federal award information in the subaward that enables subrecipients to identify the source of the Federal award, as well as certain subrecipient information. ? evaluate each subrecipient?s risk of noncompliance with Federal regulations for the purposes of determining the appropriate level of subrecipient monitoring to be performed. ? monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Department is responsible for ensuring subrecipients comply with Federal requirements by: ? reviewing subrecipient grant awards to ensure accurate Federal award identification information is included to allow subrecipients to accurately identify the source of the subawards; ? utilizing risk evaluations to determine the appropriate level of monitoring activities to be performed that correspond to the results of those risk evaluations; and ? performing ongoing monitoring activities to ensure that the subaward was used for authorized purposes and in compliance with Federal regulations. The Office of the State Auditor (OSA) tested compliance with subrecipient monitoring requirements for 7 subrecipients and found that: ? 3 subawards did not properly identify required Federal award information: o 2 subawards were missing the subrecipient?s Data Universal Numbering System (DUNS) number. o 2 subawards reported the wrong Assistance Listing Number. ? 2 subrecipients were deemed ?higher risk? after the Department performed a risk evaluation; however, the Department could not provide documentation to support that additional monitoring activities were performed in response to the ?higher risk? designation. ? 80 performance reports were required to be completed and submitted for fiscal year 2022 to ensure subaward performance goals are achieved. o 47 reports were provided to the auditor but lacked evidence of supervisory review. o 33 reports could not be provided. ? 52 financial reports were required to be completed and submitted for fiscal year 2022 to ensure subawards are used for approved budgeted expenditures. o 32 reports were provided to the auditor but lacked evidence of supervisory review. o 20 reports could not be provided. The Department could not provide any further documentation to support subrecipient monitoring procedures occurred during fiscal year 2022 to ensure that the subaward was used for authorized purposes. OSA selected a non-statistical random sample. Context: The Department provided $2.5 million to 35 Immunization Cooperative Agreements (ICA) program subrecipients in fiscal year 2022. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? Lack of ongoing subrecipient monitoring procedures could result in undetected subrecipient noncompliance. Recommendation: We recommend that the Department implement policies and procedures to ensure that: ? subaward agreements include all required information and are accurate; ? risk evaluations are utilized to determine the appropriate level of monitoring activities to be performed; and ? ongoing subrecipient monitoring is completed during the subaward and documented. This will ensure that the Department is in compliance with subrecipient monitoring requirements. Corrective Action Plan: See F-22 Management?s Response: The Department agrees with this finding. The Department initiated these subrecipient agreements to ensure equitable access to COVID-19 vaccines. As a result of these agreements, Maine had one of the best vaccine roll-outs in the country, including among Black, Indigenous, and People of Color. Some of the information requested by OSA was unable to be accessed because it was saved in individual staff files which were moved when an employee was transferred or left employment with the Department. The Department will implement processes in SFY23 to improve record keeping for these subawards including: 1) reviewing subaward agreements using a checklist to ensure they include all the required information and are accurate; 2) ensuring that risk evaluations are utilized to determine the appropriate level of monitoring; and 3) improving and centralizing subrecipient monitoring documentation within the Office of Population Health Equity (OPHE) at Maine CDC. Contact: Ian Yaffe, Director, Office of Population Health Equity, DHHS, 207- 592-1481 (State Number: 22-1118-03)
(2022-059) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-22 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-02)
(2022-060) Title: Internal control over the submission of ICA Schedule of Expenditures of Federal Awards reporting needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Immunization Cooperative Agreements (ICA) program. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal ICA expenditures to OSC which included noncash vaccine awards; however, the summary included the wrong fiscal year?s noncash vaccine award data. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. As a result, ICA expenditures were inaccurately reported on the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: In fiscal year 2022, noncash flu vaccines totaling $169,070 were not reported to OSC by the Department for inclusion in the SEFA. Cause: Lack of adequate internal control relating to Department SEFA submissions to OSC Effect: ? Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. ? Inaccurate information was reported in the fiscal year 2022 Annual Comprehensive Financial Report. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-22 Management?s Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, when the request is sent from the Financial Service Center to the MIP Senior Health Program Manager (SHPM), the SHPM will request the information from the MIP Planning and Research Associate. The SHPM will be required to review the requested data prior to the response, which will include fiscal year accuracy of the reports. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to CDC?s Immunization program for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with CDC?s Immunization?s program to verify that the information provided was accurate. This will be completed by 12/31/2023. Contact: Jessica Shiminski, Health Program Manager, Maine Center for Disease Control & Prevention, DHHS, 207-287-7087 (State Number: 22-1118-01)
(2022-061) Title: Internal control over ICA program cash management needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: NH23IP922604 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services Service Center (DHHS SC) is responsible for the drawdown of funds for the Immunization Cooperative Agreements (ICA) program. The DHHS SC requests Federal funds in order to reimburse ICA program expenditures. In December 2021, $478,459 of program expenditures that had previously been reimbursed under the ICA program were recategorized as eligible Coronavirus Relief Fund expenditures. The DHHS SC did not immediately return the funds that were received for these expenditures and continued to draw additional Federal funds under the ICA grant. As a result, the State?s Federal cash balances for the ICA program exceeded the State?s administratively feasible threshold of seven business days for approximately seven months. Context: In fiscal year 2022, there were approximately 160 Federal grant drawdowns totaling $8.7 million for the ICA program. Cause: ? Lack of adequate procedures to capture all program activity ? Lack of supervisory oversight Effect: The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC develop and implement policies and procedures to address identification and timely return of excess grant funds to the Federal government. Corrective Action Plan: See F-23 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. The grant daily files will be reconciled for the Immunization grants from 2021 through current by December 31, 2023 in order to timely identify and return excess grant funds. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1118-02)
(2022-062) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-23 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-01)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-063) Title: Internal control over ELC program reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18115; Paycheck Protection Program and Health Care Enhancement Act of 2020 (PL 116-139); Coronavirus Response and Relief Supplemental Appropriations Act of 2020 (PL 116-260) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must ensure that every laboratory that performs or analyzes a test that is intended to detect or diagnose a possible case of COVID-19 reports the results from each test to the U.S. Department of Health and Human Services. Condition: During fiscal year 2022, the Maine Center for Disease Control & Prevention (MeCDC) was required to complete the following reports: ? Quarterly and annual performance reports for four separate Federal awards ? Quarterly special reports for jurisdictional testing and positive/negative test results MeCDC could not provide supporting documentation to verify the accuracy, completeness, and timeliness of the filed reports. In addition, all reports were filed without documentation of approval by a secondary person prior to submission. Context: During fiscal year 2022, 16 quarterly performance reports, four annual performance reports, and two quarterly special reports were required to be filed. Cause: ? Lack of adequate internal controls ? Lack of supervisory oversight ? Lack of staff resources due to a significant increase in workload Effect: ? Incorrect or incomplete data may be reported to the Federal government. ? Potential Federal noncompliance due to performance and special reports not filed timely Recommendation: We recommend that MeCDC implement a documented process over the completion, filing, review, and retention of performance and special reports. Corrective Action Plan: See F-23 Management?s Response: The Department agrees with this finding. The Division of Disease Surveillance, within the Maine Center of Disease Control and Prevention put into place a comprehensive process to ensure quarterly and annual performance reports and special reports are properly completed, reviewed, filed, and retained during the fall of 2022. In September 2022, the Division hired a Grants Manager who developed a report tracking system using Microsoft Project. The individuals completing the reports, now complete them in Microsoft Project and from there the Grant Manager reviews for completeness and uploads into the federal site. The Grants Manager sends an email to the Principal Investigator when reports are complete and have been submitted to the federal CDC. Contact: Sara Robinson, Senior Program Manager, MeCDC, DHHS, 207-287-4610 (State Number: 22-1156-01)
(2022-064) Title: Internal control over submission and review of ELC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Office of the State Controller Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. At the close of the fiscal year, the Department and its Service Center reported Federal expenditures of $45 million under the ELC program to OSC; however, current year expenditures actually totaled $59 million. This information was then used by OSC to compile and prepare the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, ELC expenditures were incorrect on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: The 2022 SEFA originally reported total expenditures under ELC totaling $45 million; however, this included $14 million of prior year ELC expenditures that were transferred out of current year SEFA totals to the Coronavirus Relief Fund, resulting in an understatement of fiscal year ELC expenditures. Cause: ? Lack of adequate internal control relating to SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department work with its Service Center to implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-23 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and the DHHS Financial Service Center agree with this finding. The Financial Service Center will work with OSC to develop and implement additional procedures related to reporting of prior period adjustments beginning with the SEFA that is for the State Fiscal Year 2023, by December 31, 2023. DHHS Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1156-02)
(2022-065) Title: Internal control over ELC program cash management needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services (DHHS) Service Center (SC) provides services including human resources, payroll, accounting, and finance to programs administered by DHHS, including the Epidemiology and Laboratory for Infectious Diseases (ELC) program. The DHHS SC requests Federal funds to reimburse ELC program expenditures utilizing a system report of expenditures. This report includes both expenditures that have been paid and expenditures that are pending payment. Expenditures that are pending payment can take a significant amount of time to process. In the Office of the State Auditor?s testing of 48 Federal drawdowns, four drawdowns of Federal funds for the ELC program were beyond the administratively feasible requirement for disbursement. Disbursements ranged from 8 to 63 days after the receipt of Federal funds. The Office of the State Auditor selected a non-statistical random sample. Context: In fiscal year 2022, there were 211 Federal grant draws for the ELC program totaling $43.7 million. The four draws beyond the administratively feasible requirement for disbursement totaled $5.9 million. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC review and revise current policies and include guidance for drawing Federal funds to exclude pending expenditures to ensure that Federal cash is requested based on immediate cash needs. Corrective Action Plan: See F-24 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. Due to the number of individual CDC COVID grants received, the volume of daily processes has increased. The DHHS Financial SC will work to obtain and/or increase estimated revenue within the COVID appropriations. With an approval of estimated revenue, expenses will process first, and federal cash will be drawn after, reducing the risk of CMIA as Federal cash will be instantly replenishing the account rather than waiting for invoices to process. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1156-05)
(2022-066) Title: Internal control over ELC program suspension and debarment needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 180.220 and .300; Division of Contract Management Policy The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. The Division of Contract Management (DCM) requires all subrecipients to register in the System of Award Management (SAM) prior to awarding Federal funds to a recipient. DCM?s policy also requires annual verification, review and documentation of suspension and debarment compliance obtained from the SAM website. This document is required to be retained for each subrecipient that administers the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) grant. Condition: The Department of Health and Human Services? DCM administers subrecipient contracts for the ELC program. Included in all contracts is a Debarment, Performance, and Non- Collusion Certification. Annually, contract administrators are responsible for verifying that entities are not suspended or debarred on the SAM website. The Office of the State Auditor (OSA) selected eight subrecipients for testing compliance with suspension and debarment regulations. DCM could not provide documented support that: ? review and verification procedures were completed for five of the eight subrecipients tested. ? one subrecipient was registered on the SAM website. As a result, compliance with suspension and debarment could not be verified. The Department paid $54,423 to the subrecipient. OSA selected a non-statistical random sample. Context: The Department provided $5.9 million to the 43 subrecipients that administered the ELC program during fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional procedures to ensure that verification of suspension and debarment procedures are performed, properly documented, and retained. This will ensure that the Department does not enter into an agreement with a suspended or debarred entity. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Uniform Guidance part 200.214 identifies that non-Federal entities are subject to the non-procurement debarment and suspension regulations in 2 CFR part 180. 2 CFR part 180 requires that ?when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.? The Department meets this requirement as part of the contracting process by collecting certifications from the Community Agencies stating that they are not suspended or debarred. Therefore, we are in compliance with the Federal requirements for Suspension and debarment. The intent of the Department?s policy to utilize the System for Award Management Exclusions (SAM) is to be an optional and additional assurance to the required collection of certifications that the next lower tier persons are not suspended or debarred. The SAM is utilized as time and resources permit and is not intended to replace the certifications. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: DCM established the following policies to ensure compliance with Federal regulations: ? Subrecipients must register with the SAM prior to receiving Federal funds. ? Annual verification that the subrecipient is not suspended or debarred must be completed by obtaining and retaining such information from the SAM website. ? A Debarment, Performance, and Non-Collusion Certification is included in the subrecipient contract. One subrecipient was not registered with the SAM and the Department could not provide documentation to support that verification was performed for five subrecipients. It is the responsibility of the Department to implement policies and procedures to ensure compliance with Federal regulations. The Department has established such policies and identified these policies as the control mechanism to ascertain that the Department does not contract subrecipients who are suspended or debarred. To attest that a policy is optional negates the effectiveness of the control mechanism. The Department did not follow its established policies; therefore, a failure in the control process exists. The finding remains as stated. (State Number: 22-1156-03)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-063) Title: Internal control over ELC program reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; Coronavirus Aid, Relief, and Economic Security (CARES) Act Section 18115; Paycheck Protection Program and Health Care Enhancement Act of 2020 (PL 116-139); Coronavirus Response and Relief Supplemental Appropriations Act of 2020 (PL 116-260) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must ensure that every laboratory that performs or analyzes a test that is intended to detect or diagnose a possible case of COVID-19 reports the results from each test to the U.S. Department of Health and Human Services. Condition: During fiscal year 2022, the Maine Center for Disease Control & Prevention (MeCDC) was required to complete the following reports: ? Quarterly and annual performance reports for four separate Federal awards ? Quarterly special reports for jurisdictional testing and positive/negative test results MeCDC could not provide supporting documentation to verify the accuracy, completeness, and timeliness of the filed reports. In addition, all reports were filed without documentation of approval by a secondary person prior to submission. Context: During fiscal year 2022, 16 quarterly performance reports, four annual performance reports, and two quarterly special reports were required to be filed. Cause: ? Lack of adequate internal controls ? Lack of supervisory oversight ? Lack of staff resources due to a significant increase in workload Effect: ? Incorrect or incomplete data may be reported to the Federal government. ? Potential Federal noncompliance due to performance and special reports not filed timely Recommendation: We recommend that MeCDC implement a documented process over the completion, filing, review, and retention of performance and special reports. Corrective Action Plan: See F-23 Management?s Response: The Department agrees with this finding. The Division of Disease Surveillance, within the Maine Center of Disease Control and Prevention put into place a comprehensive process to ensure quarterly and annual performance reports and special reports are properly completed, reviewed, filed, and retained during the fall of 2022. In September 2022, the Division hired a Grants Manager who developed a report tracking system using Microsoft Project. The individuals completing the reports, now complete them in Microsoft Project and from there the Grant Manager reviews for completeness and uploads into the federal site. The Grants Manager sends an email to the Principal Investigator when reports are complete and have been submitted to the federal CDC. Contact: Sara Robinson, Senior Program Manager, MeCDC, DHHS, 207-287-4610 (State Number: 22-1156-01)
(2022-064) Title: Internal control over submission and review of ELC Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Office of the State Controller Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. At the close of the fiscal year, the Department and its Service Center reported Federal expenditures of $45 million under the ELC program to OSC; however, current year expenditures actually totaled $59 million. This information was then used by OSC to compile and prepare the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, ELC expenditures were incorrect on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: The 2022 SEFA originally reported total expenditures under ELC totaling $45 million; however, this included $14 million of prior year ELC expenditures that were transferred out of current year SEFA totals to the Coronavirus Relief Fund, resulting in an understatement of fiscal year ELC expenditures. Cause: ? Lack of adequate internal control relating to SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department work with its Service Center to implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-23 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and the DHHS Financial Service Center agree with this finding. The Financial Service Center will work with OSC to develop and implement additional procedures related to reporting of prior period adjustments beginning with the SEFA that is for the State Fiscal Year 2023, by December 31, 2023. DHHS Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1156-02)
(2022-065) Title: Internal control over ELC program cash management needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Maine Center for Disease Control & Prevention Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Department of Health and Human Services (DHHS) Service Center (SC) provides services including human resources, payroll, accounting, and finance to programs administered by DHHS, including the Epidemiology and Laboratory for Infectious Diseases (ELC) program. The DHHS SC requests Federal funds to reimburse ELC program expenditures utilizing a system report of expenditures. This report includes both expenditures that have been paid and expenditures that are pending payment. Expenditures that are pending payment can take a significant amount of time to process. In the Office of the State Auditor?s testing of 48 Federal drawdowns, four drawdowns of Federal funds for the ELC program were beyond the administratively feasible requirement for disbursement. Disbursements ranged from 8 to 63 days after the receipt of Federal funds. The Office of the State Auditor selected a non-statistical random sample. Context: In fiscal year 2022, there were 211 Federal grant draws for the ELC program totaling $43.7 million. The four draws beyond the administratively feasible requirement for disbursement totaled $5.9 million. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: ? Noncompliance with Federal regulations ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. Recommendation: We recommend that the DHHS SC review and revise current policies and include guidance for drawing Federal funds to exclude pending expenditures to ensure that Federal cash is requested based on immediate cash needs. Corrective Action Plan: See F-24 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Policies and procedures will be reviewed for CMIA, draw procedures and reconciliations. Due to the number of individual CDC COVID grants received, the volume of daily processes has increased. The DHHS Financial SC will work to obtain and/or increase estimated revenue within the COVID appropriations. With an approval of estimated revenue, expenses will process first, and federal cash will be drawn after, reducing the risk of CMIA as Federal cash will be instantly replenishing the account rather than waiting for invoices to process. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1156-05)
(2022-066) Title: Internal control over ELC program suspension and debarment needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Assistance Listing Number: 93.323 Federal Award Identification Number: NU50CK000523 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 180.220 and .300; Division of Contract Management Policy The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. The Division of Contract Management (DCM) requires all subrecipients to register in the System of Award Management (SAM) prior to awarding Federal funds to a recipient. DCM?s policy also requires annual verification, review and documentation of suspension and debarment compliance obtained from the SAM website. This document is required to be retained for each subrecipient that administers the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) grant. Condition: The Department of Health and Human Services? DCM administers subrecipient contracts for the ELC program. Included in all contracts is a Debarment, Performance, and Non- Collusion Certification. Annually, contract administrators are responsible for verifying that entities are not suspended or debarred on the SAM website. The Office of the State Auditor (OSA) selected eight subrecipients for testing compliance with suspension and debarment regulations. DCM could not provide documented support that: ? review and verification procedures were completed for five of the eight subrecipients tested. ? one subrecipient was registered on the SAM website. As a result, compliance with suspension and debarment could not be verified. The Department paid $54,423 to the subrecipient. OSA selected a non-statistical random sample. Context: The Department provided $5.9 million to the 43 subrecipients that administered the ELC program during fiscal year 2022. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional procedures to ensure that verification of suspension and debarment procedures are performed, properly documented, and retained. This will ensure that the Department does not enter into an agreement with a suspended or debarred entity. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Uniform Guidance part 200.214 identifies that non-Federal entities are subject to the non-procurement debarment and suspension regulations in 2 CFR part 180. 2 CFR part 180 requires that ?when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.? The Department meets this requirement as part of the contracting process by collecting certifications from the Community Agencies stating that they are not suspended or debarred. Therefore, we are in compliance with the Federal requirements for Suspension and debarment. The intent of the Department?s policy to utilize the System for Award Management Exclusions (SAM) is to be an optional and additional assurance to the required collection of certifications that the next lower tier persons are not suspended or debarred. The SAM is utilized as time and resources permit and is not intended to replace the certifications. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: DCM established the following policies to ensure compliance with Federal regulations: ? Subrecipients must register with the SAM prior to receiving Federal funds. ? Annual verification that the subrecipient is not suspended or debarred must be completed by obtaining and retaining such information from the SAM website. ? A Debarment, Performance, and Non-Collusion Certification is included in the subrecipient contract. One subrecipient was not registered with the SAM and the Department could not provide documentation to support that verification was performed for five subrecipients. It is the responsibility of the Department to implement policies and procedures to ensure compliance with Federal regulations. The Department has established such policies and identified these policies as the control mechanism to ascertain that the Department does not contract subrecipients who are suspended or debarred. To attest that a policy is optional negates the effectiveness of the control mechanism. The Department did not follow its established policies; therefore, a failure in the control process exists. The finding remains as stated. (State Number: 22-1156-03)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-067) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $1,447 Likely Questioned Costs: Likely questioned costs totaling $35,002 were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to TANF clients for these services and payments to providers on behalf of TANF clients in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: ? one payment issued in October 2021 overpaid a provider by $22 for Transitional Child Care. Upon further review, OSA found that an additional $506 was overpaid to the child- care provider during fiscal year 2022. The overpayment was identified by the Department in December 2021; however, as of audit testing, 14 months after the overpayment was identified, there has not been a recoupment. ? one payment overpaid a provider by $15 for Transitional Child Care. Upon further review, OSA found that an additional $555 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment overpaid a provider by $17 for Transitional Child Care. Upon further review, OSA found that an additional $323 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment issued in May 2022 overpaid a TANF client a total of $75 for clothing. An advance allowance was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in July 2022 and $66 of the overpayment was recouped on January 6, 2023. OSA selected a non-statistical random sample. Context: In fiscal year 2022, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $6.8 million. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented. We further recommend that the Department increase monitoring procedures over these payments. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Department?s effective internal controls identified the overpayments, made the referrals, and followed procedures for two of the four exceptions noted. The two exceptions that we did not identify as overpayments we believe are in accordance with the reasonably calculated requirement to accomplish one or more of the four TANF purposes and should not be considered unallowable. The criteria cited do not indicate any requirement to recoup funds within a specific time frame and the exceptions noted demonstrate the effective internal controls rather than indicate any misuse of funds. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department?s internal controls did not identify two overpayments in OSA?s sample. The Department did identify the other two overpayments in OSA?s sample; however, for one of those overpayments, no action had been taken by the Department 14 months after the overpayment was identified. Therefore, the Department?s internal controls do not provide reasonable assurance that the Federal award is being managed in compliance with Federal statutes, regulations, and the terms and condition of the award. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Overpayments made to providers or clients with Federal funds are not a necessary cost for the performance of the Federal award; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1111-03)
(2022-068) Title: Internal control over Income Eligibility and Verification System procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 205.56 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to comply with Federal Income Eligibility and Verification System (IEVS) exchange rules and regulations in accordance with program agreements. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Condition: IEVS is used to exchange information among State and Federal agencies to verify various information needed to determine eligibility for Federal financial assistance. This information is updated in the Automated Client Eligibility System (ACES) to ensure eligibility determinations are made based on current information. IEVS generates various discrepancy reports on a weekly, monthly, and quarterly basis. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Federal guidance over the TANF program outlines audit procedures to ensure that the State has established and implemented the required IEVS exchange for data matching and verification of such data. These procedures include testing a sample of TANF cases subject to IEVS. OSA requested a list of TANF cases subject to IEVS for testing purposes; in response, the Department provided OSA with all IEVS discrepancy reports run in fiscal year 2022. The reports provided by the Department contain cases for TANF, SNAP, and Medicaid/Medicare, and do not have a specific Federal program indicator. The Department was unable to provide OSA with a report that isolates TANF-specific cases subject to IEVS. Without a population of TANF-specific cases, OSA is unable to verify that the program is in compliance with Federal requirements. Context: Approximately 195 IEVS reports are required to be generated annually. The number of discrepancies on each report can vary from zero to almost 20,000. The Department cannot determine the number of discrepancies related to TANF. Cause: ? Lack of resources ? Lack of adequate procedures to ensure that an accurate report of TANF cases subject to IEVS can be provided Effect: ? IEVS information may not be updated timely in ACES, which could result in incorrect eligibility determinations. ? Failure to maintain documentation to support compliance with required TANF exchange rules may result in the U.S. Department of Health and Human Services penalizing the State up to two percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure IEVS discrepancy reports can be provided for the identified Federal award program so that audit procedures can be performed in accordance with Federal regulations. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has conducted the required IEVS eligibility verifications. Additionally, sufficient evidence of these efforts has been provided to the Office of the State Auditor so that audit procedures can be performed in accordance with Federal regulations. OFI utilizes the Federally provided IEVS system which integrates the three named population groups (Medicaid, SNAP, TANF). The IEVS discrepancy reports have not contained Federal program indicators since program inception over 20 years ago. This is consistent with the methodology utilized by the Social Security Administration, as they too group the OFI programs together in their discrepancy reports. These same reports have been provided for prior Single Audits without being considered an exception condition. Upon request, the Department provided OSA: 1. All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF. 2. A complete listing of all TANF cases subject to IEVS in State fiscal year 2022. 3. Access to our Automated Client Eligibility System, which documents all IEVS related case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of TANF cases subject to IEVS. In an internal control meeting on January 9, 2023, between OSA and OFI, OFI management raised concerns regarding IEVS exceptions noted in finding 2021-043 in the fiscal year ending June 30, 2021 Single Audit Report. Management asserted that the exceptions listed in the finding were not TANF-specific as they related mainly to Medicaid and SNAP. In addition, in accordance with Federal guidelines, Assistance Listing Number 93.558, OSA is required to test a sample of TANF cases subject to IEVS in order to meet audit requirements. OSA requested a population of TANF cases subject to IEVS in order to draw a sample for testing purposes. OFI did not provide the information requested and therefore, OSA was unable to test compliance with 45 CFR 205.56. In response to the materials provided to OSA by OFI: 1. ?All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF.? The IEVS discrepancy reports provided by the Department contain cases for Medicaid, SNAP, and TANF, and do not have a specific Federal program indicator to delineate TANF-specific cases. OFI further informed OSA that they did not have the current bandwidth to manually cross-walk the complete list of all TANF eligible recipients against the IEVS discrepancy reports to identify TANF-only cases. OFI insisted that OSA perform the task. Suggesting that OSA crosswalk information to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, the reports provided cannot be utilized for audit testing. 2. ?A complete listing of all TANF cases subject to IEVS in State fiscal year 2022.? This list includes all TANF eligible clients for fiscal year 2022 subject to IEVS; however, not all TANF eligible clients will show up on an IEVS discrepancy report. Therefore, this listing cannot be utilized for audit testing. 3. ?Access to our Automated Client Eligibility System, which documents all IEVS related case notes.? This provides OSA with access to ACES for audit testing purposes. As noted above, OSA was not provided the information requested in order to complete audit testing. Therefore, as detailed in the finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 205.56. The finding remains as stated. (State Number: 22-1111-02)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-070) Title: Internal control over TANF client child support sanction procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 264.30; 42 USC 608(a)(2) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. If the Department determines that an individual is not cooperating with child support enforcement requirements, the Department is required to sanction the individual by deducting an amount equal to not less than 25 percent from the TANF assistance that would otherwise be provided to the family of the individual and may deny the family any TANF assistance. Condition: The Department?s Division of Support Enforcement and Recovery (DSER) is responsible for enforcing child support requirements. DSER sends email notifications (sanction requests) to TANF personnel when individuals not cooperating with child support enforcement requirements are identified. If TANF personnel determine that the individual needs to be sanctioned after reviewing the individual?s case, they will process the sanction request in the Automated Client Eligibility System (ACES). Federal guidance requires the Office of the State Auditor (OSA) to develop audit procedures in order to test a sample of cases referred to TANF by DSER. OSA requested a list of sanction requests from DSER for testing purposes. In response to this request, the Department provided 960 email notifications relating to child support sanction requests. OSA selected a random sample of 60 emails from the population for testing and determined the following: ? 35 emails were DSER requests to lift prior sanctions imposed. OSA was unable to determine if the sanction was requested and referred during the fiscal year. ? One email requested a child support affidavit which is not related to child support sanctions. ? One email contained a disability determination review application which is not related to child support sanctions. ? One email requested a child support sanction but omitted client identification information required to process the request. Therefore, OSA was unable to test compliance with sanction requirements for 38 of the 60 emails sampled from the population of sanction requests provided by the Department. OSA selected a non-statistical random sample. Context: DSER personnel transmit sanction requests through email to a general inbox that receives other notifications and collects approximately 400 emails per day. The sanction requests are then forwarded by a designated supervisor to the appropriate TANF personnel to be processed in ACES. Cause: ? Lack of resources. The Department is unable to obtain a complete listing of sanction requests from DSER without dedicating a significant amount of time and resources sorting through the general email inbox. ? Lack of supervisory oversight Effect: ? Noncompliant clients may be paid benefits that they are not entitled to receive. ? Failure to maintain appropriate documentation to demonstrate compliance with Federal program sanction requirements may result in the U.S. Department of Health and Human Services penalizing the State for up to five percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure that all sanction requests are maintained in a central repository so that they can be easily retrieved for tracking and review purposes. We further recommend that the Department increase oversight to ensure compliance with Federal requirements. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has sufficient internal controls in place to ensure compliance with Federal requirements. Specifically, based on the finding?s stated condition, OSA did not take exception with the 22 items that were actually tested for compliance. Additionally, OFI has provided sufficient information for OSA to identify and conduct the audit and compliance testing of cases referred by DSER for sanction. The Department has provided OSA with the following material as requested: 1. The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency. 2. The list of all OFI-TANF clients actually sanctioned by TANF Eligibility. 3. The list of all OFI-TANF clients 4. Copies of all emails pertaining to all sanction activity 5. Access to our Automated Client Eligibility System which includes all documented case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of cases referred to TANF by the Title IV-D agency, DSER. In an internal control meeting held on January 11, 2023, between OSA and the Department, the Department identified the control process over sanction requests used by DSER staff after non- compliance by a Custodial Parent (CP) as an email generated by DSER staff that is sent to a general email box at OFI with the subject line of ?Sanction Request?. The Department established that the referral email alerts OFI Eligibility Specialists to the issue and requests OFI to sanction the CP. OSA requested the population of these emails in order to draw a sample for audit testing and was provided a listing of 960 emails from which OSA selected a random sample. OSA tested compliance with sanction requests from the random sample. As a result of this testing, OSA agrees that the population provided by the Department was incorrect. In response to the materials provided to OSA by the Department: 1. ?The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency.? This list was generated based on noncooperation dates entered in the Child Support Enforcement of Maine (CSEME) system; however, the Department confirmed that noncooperation dates are not consistently entered into CSEME by DSER personnel. Therefore, this list cannot be relied upon. 2. ?The list of all OFI-TANF clients actually sanctioned by TANF Eligibility.? This list documents sanction requests that were processed by OFI Eligibility. The list omits requests where OFI eligibility determined a sanction request was not required. Therefore, this list cannot be relied upon. 3. ?The list of all OFI-TANF clients.? This list includes all TANF eligible clients for fiscal year 2022; however, not all TANF eligible clients are sanctioned for child support noncooperation. Therefore, this list cannot be relied upon. 4. ?Copies of all emails pertaining to all sanction activity.? The Department provided OSA with 960 emails that were both sanction and non-sanction related. Suggesting that OSA categorize emails to delineate sanction requests versus other emails in order to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, as noted above, this list cannot be relied upon. 5. ?Access to our Automated Client Eligibility System (ACES) which includes all documented case notes.? This provides OSA with access to ACES for audit testing purposes which OSA completed based on the information provided by the Department. Therefore, as detailed in this finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 264.30. The finding remains as stated. (State Number: 22-1111-01)
(2022-071) Title: Internal control over TANF subrecipient risk evaluation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of Child and Family Services Division of Contract Management Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in 2 CFR 200.332. Condition: The Department has established subrecipient monitoring procedures depending on whether the subaward is competitively bid or not. If a subaward is competitively bid, the Department seeks input from the Department of Health and Human Services Service Center, and the Department?s Division of Audit and Division of Contract Management regarding known issues with the provider who submitted the bid. Those responses are collected and provided to the evaluation team which consists of various program personnel. The subaward agreement is then drafted and the level of subrecipient monitoring is included in the agreement. If a subaward is not competitively bid, the subaward agreement is drafted based on the level of subrecipient monitoring that the Department has established for the provided services. The Office of the State Auditor (OSA) selected seven TANF subrecipients for testing and found: ? one subrecipient competitively bid on the subaward. The Department was able to provide evidence to support that feedback was solicited from other Bureaus for any known issues or prior noncompliance; however, documentary evidence could not be provided to support the level of subrecipient monitoring that was completed. ? six subrecipients did not competitively bid on the subaward. For those six subrecipients, no documentary evidence could be provided to support the level of subrecipient monitoring that was completed. OSA selected a non-statistical random sample. Context: The Department provided $17.9 million to TANF subrecipients during fiscal year 2022. Cause: Lack of adequate policies and procedures Effect: ? Without a documented process, subrecipient risk evaluation procedures may not be consistently followed, and documentation may not be adequately maintained. ? Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department: ? document procedures that outline the collaborative process with all Bureaus. ? implement policies and procedures that require evaluation of each subrecipient?s risk of noncompliance specifically for the purposes of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-26 Management?s Response: The Department disagrees with this finding. The Department has subrecipient monitoring procedures for all of its subrecipients whether they were competitively bid or not. The first assessment of risk, as noted in the finding, is when a subaward is competitively bid. Secondly, another risk assessment built into the Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP) in which requires higher risk subrecipients to undergo a higher level of testing. Additionally, there are audit and review requirements at a much lower threshold than that of the Uniform Guidance (UG). Finally, the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. The Department?s subrecipient monitoring procedures ensures that we comply with the UG 200.332(d) Pass-through entity (PTE) monitoring of the subrecipient must include: 1) Review of financial and performance reports. 2) Following-up and ensuring that subrecipients take timely and appropriate action on all deficiencies. 3) Issues management decisions. 4) PTE is responsible for resolving audit findings specifically related to the subaward. Based on the Department?s MAAP rules we ensure we comply with UG 200.332(e). Depending on the PTE?s assessment of risk, the following tools may be useful: 1) Training and technical assistance. 2) On-site reviews. 3) Arranging for agreed upon procedures. The Department covers #3 by ensuring that all of our subrecipients have a requirement to submit to the Department a/an Audit, Review or Schedule of Expenditures of Department Awards (SEDA). Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The Department has misinterpreted the Federal regulation cited in this finding. The Department has responded to 2 CFR 200.332(d), which identifies monitoring procedures to be conducted during the subrecipient award period. OSA audited compliance with this during-the-award monitoring requirement and did not identify deficiencies. The Federal regulation that the Department failed to meet is 2 CFR 200.332(b). This regulation identifies procedures to be performed prior to monitoring procedures in order to determine the level of monitoring required for each subrecipient. 2 CFR 200.332(b) states that the Department 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, which may include consideration of factors such as: ? the subrecipient?s prior experience with the same or similar subawards; ? the results of previous audits including whether or not the subrecipient receives a Single Audit, and the extent to which the same or similar subaward has been audited as a major program; ? whether the subrecipient has new personnel or new or substantially changed systems; and ? the extent and results of Federal awarding agency monitoring. The Department did not provide any documentation to support that monitoring procedures performed were based on an evaluation of the subrecipient?s risk of noncompliance. The finding remains as stated. (State Number: 22-1111-05)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-073) Title: Internal control over TANF reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302(b) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements. Condition: The Department is required to submit accurate and complete financial reports to the Federal government. On the SF-425 financial report for the period ending December 31, 2021, cumulative Federal cash disbursements should have been reported in the amount of $54,898,345 instead of $32,885,310. Context: TANF program expenditures totaled $81.9 million in fiscal year 2022. Cause: Lack of supervisory oversight Effect: Noncompliance with Federal reporting requirements Recommendation: Although TANF is no longer required by the Federal government to submit SF-425 reports beginning with the period ending March 31, 2022, we recommend that the Department enhance their review procedures to ensure all financial reports are accurate and complete. Corrective Action Plan: See F-27 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Effective April 1, 2022, the US Department of Health and Human Services grant recipients are no longer required to complete the quarterly Federal Cash Transaction Report ?FCTR? (also referred to as the FFR-425 or SF-425) to report cumulative Federal cash disbursements. Procedures are currently in place to ensure Federal financial reporting is reviewed accurately. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1100-03)
(2022-074) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-27 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-03)
(2022-075) Title: Internal control over TANF performance reporting and work participation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 261.60 through .62; 45 CFR 265.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain adequate documentation, perform adequate verification, and implement other control procedures for TANF client work participation. Work participation activities include unsubsidized employment, job search and job readiness, job skills training directly related to employment, vocational education, and other work-related programs. The Department must report the actual hours that a work-eligible TANF client participates in these work-related activities, on the ACF-199 TANF Data Report and the ACF-209 SSP-MOE Data Report on a quarterly basis. These reports are required by the Federal government. Condition: The Department reported incorrect work participation information on the ACF-199 and ACF-209 reports. Of the 120 clients tested, inaccurate work participation data was reported for 14 clients, including inaccurate: ? subsidized childcare, ? countable months towards the Federal time limit of 60 months, ? work participation status, ? unsubsidized employment hours, ? and vocational education training hours The Office of the State Auditor selected a non-statistical random sample. Context: The Department must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of information reported to the Federal government and used to calculate work participation rates. In fiscal year 2022, the number of clients reported on the ACF-199 report ranged from approximately 11,000 to 13,000 clients, and the number of clients reported on the ACF-209 report ranged from approximately 36,000 to 38,000 clients. Cause: ? Lack of adequate procedures to ensure work participation data is accurately reflected in the Automated Client Eligibility System (ACES) and Fedcap Customer Assistance for Re- employment and Economic Support (FedcapCARES) case management system, and reported correctly in the quarterly Federal performance reports ? Lack of supervisory oversight Effect: ? Incorrect work participation data reported to the Federal government may affect the Federal requirement for TANF?s State Maintenance of Effort. ? The Federal government may penalize the State by an amount not less than one percent and not more than five percent of the grant award for violation of work verification plan requirements. Recommendation: We recommend that the Department enhance existing procedures to ensure that the information reported on the ACF-199 and ACF-209 reports is accurate and complete prior to submission to the Federal government. This should include increased systemic monitoring to improve the reliability of work participation data that is reported to the Federal government. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Department acknowledges eight of the fourteen cases cited as containing errors. Significant improvements have been made to the systemic monitoring of the ACF-199 and ACF-209 reports as evidenced by recent edits to the standard operating procedures governing this system in February and May of 2022. Due to the nature of corrective action plans, and the timing of the state audit, the Department does not believe a corrective action plan is warranted at this time. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1111-06)
(2022-076) Title: Internal control over TANF subrecipient audit procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited. Condition: The Department requires subrecipients to submit their Single Audit to the Department?s Division of Audit. The Division maintains a database to track when subrecipient Single Audit reports are due and ensures that they are received. The Office of the State Auditor (OSA) tested four TANF subrecipients that had a Single Audit due in fiscal year 2022 for compliance with Federal regulations and found that the Division did not obtain the Single Audit for one subrecipient. The Division could not provide documentation to support that they contacted the subrecipient when the Single Audit was late. OSA was able to confirm that the subrecipient did have a Single Audit as required. Context: A Single Audit was due in fiscal year 2022 for eight TANF subrecipients that received $28.2 million of Federal funds in fiscal year 2021. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance existing procedures to ensure that subrecipients that expend $750,000 or more in Federal awards complete and submit a Single Audit within the required time requirements. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. We will revise our standard operating procedures (SOP) to include the search for out of state subrecipients on the Federal Audit Clearinghouse. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 22-1100-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-067) Title: Internal control over payments made to and on behalf of TANF clients needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $1,447 Likely Questioned Costs: Likely questioned costs totaling $35,002 were projected by dividing the identified known overpayment in our sample by total payments tested to establish an error rate, then applying that error rate to total payments to TANF clients for these services and payments to providers on behalf of TANF clients in fiscal year 2022. Criteria: 2 CFR 200.303; 2 CFR 200.403; 45 CFR 263.11 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department must use Federal TANF funds for expenditures that are reasonably calculated to accomplish the purposes of TANF. Use of funds in violation of this is considered misuse of funds. Condition: The Department issues TANF payments directly to a TANF client for various items and services. The Department also issues TANF payments directly to providers on behalf of TANF clients for services rendered such as child care and transportation. The Office of the State Auditor (OSA) tested 60 payments and found that: ? one payment issued in October 2021 overpaid a provider by $22 for Transitional Child Care. Upon further review, OSA found that an additional $506 was overpaid to the child- care provider during fiscal year 2022. The overpayment was identified by the Department in December 2021; however, as of audit testing, 14 months after the overpayment was identified, there has not been a recoupment. ? one payment overpaid a provider by $15 for Transitional Child Care. Upon further review, OSA found that an additional $555 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment overpaid a provider by $17 for Transitional Child Care. Upon further review, OSA found that an additional $323 was overpaid to the childcare provider during fiscal year 2022. The overpayment was identified by OSA during testing. ? one payment issued in May 2022 overpaid a TANF client a total of $75 for clothing. An advance allowance was issued to the TANF client; however, the TANF client did not submit a receipt substantiating the purchase as required. The Department identified the overpayment in July 2022 and $66 of the overpayment was recouped on January 6, 2023. OSA selected a non-statistical random sample. Context: In fiscal year 2022, payments to TANF clients for services other than direct cash benefits and payments to providers on behalf of TANF clients totaled $6.8 million. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement procedures to ensure that payments made to TANF clients and providers are accurate, allowable, and adequately documented. We further recommend that the Department increase monitoring procedures over these payments. Corrective Action Plan: See F-24 Management?s Response: The Department disagrees with this finding. The Department?s effective internal controls identified the overpayments, made the referrals, and followed procedures for two of the four exceptions noted. The two exceptions that we did not identify as overpayments we believe are in accordance with the reasonably calculated requirement to accomplish one or more of the four TANF purposes and should not be considered unallowable. The criteria cited do not indicate any requirement to recoup funds within a specific time frame and the exceptions noted demonstrate the effective internal controls rather than indicate any misuse of funds. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department?s internal controls did not identify two overpayments in OSA?s sample. The Department did identify the other two overpayments in OSA?s sample; however, for one of those overpayments, no action had been taken by the Department 14 months after the overpayment was identified. Therefore, the Department?s internal controls do not provide reasonable assurance that the Federal award is being managed in compliance with Federal statutes, regulations, and the terms and condition of the award. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Overpayments made to providers or clients with Federal funds are not a necessary cost for the performance of the Federal award; therefore, OSA questions the allowability of these costs. The finding remains as stated. (State Number: 22-1111-03)
(2022-068) Title: Internal control over Income Eligibility and Verification System procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 205.56 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to comply with Federal Income Eligibility and Verification System (IEVS) exchange rules and regulations in accordance with program agreements. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Condition: IEVS is used to exchange information among State and Federal agencies to verify various information needed to determine eligibility for Federal financial assistance. This information is updated in the Automated Client Eligibility System (ACES) to ensure eligibility determinations are made based on current information. IEVS generates various discrepancy reports on a weekly, monthly, and quarterly basis. The Department is required to resolve all discrepancies identified through IEVS reports within 45 days of receipt. Federal guidance over the TANF program outlines audit procedures to ensure that the State has established and implemented the required IEVS exchange for data matching and verification of such data. These procedures include testing a sample of TANF cases subject to IEVS. OSA requested a list of TANF cases subject to IEVS for testing purposes; in response, the Department provided OSA with all IEVS discrepancy reports run in fiscal year 2022. The reports provided by the Department contain cases for TANF, SNAP, and Medicaid/Medicare, and do not have a specific Federal program indicator. The Department was unable to provide OSA with a report that isolates TANF-specific cases subject to IEVS. Without a population of TANF-specific cases, OSA is unable to verify that the program is in compliance with Federal requirements. Context: Approximately 195 IEVS reports are required to be generated annually. The number of discrepancies on each report can vary from zero to almost 20,000. The Department cannot determine the number of discrepancies related to TANF. Cause: ? Lack of resources ? Lack of adequate procedures to ensure that an accurate report of TANF cases subject to IEVS can be provided Effect: ? IEVS information may not be updated timely in ACES, which could result in incorrect eligibility determinations. ? Failure to maintain documentation to support compliance with required TANF exchange rules may result in the U.S. Department of Health and Human Services penalizing the State up to two percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure IEVS discrepancy reports can be provided for the identified Federal award program so that audit procedures can be performed in accordance with Federal regulations. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has conducted the required IEVS eligibility verifications. Additionally, sufficient evidence of these efforts has been provided to the Office of the State Auditor so that audit procedures can be performed in accordance with Federal regulations. OFI utilizes the Federally provided IEVS system which integrates the three named population groups (Medicaid, SNAP, TANF). The IEVS discrepancy reports have not contained Federal program indicators since program inception over 20 years ago. This is consistent with the methodology utilized by the Social Security Administration, as they too group the OFI programs together in their discrepancy reports. These same reports have been provided for prior Single Audits without being considered an exception condition. Upon request, the Department provided OSA: 1. All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF. 2. A complete listing of all TANF cases subject to IEVS in State fiscal year 2022. 3. Access to our Automated Client Eligibility System, which documents all IEVS related case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of TANF cases subject to IEVS. In an internal control meeting on January 9, 2023, between OSA and OFI, OFI management raised concerns regarding IEVS exceptions noted in finding 2021-043 in the fiscal year ending June 30, 2021 Single Audit Report. Management asserted that the exceptions listed in the finding were not TANF-specific as they related mainly to Medicaid and SNAP. In addition, in accordance with Federal guidelines, Assistance Listing Number 93.558, OSA is required to test a sample of TANF cases subject to IEVS in order to meet audit requirements. OSA requested a population of TANF cases subject to IEVS in order to draw a sample for testing purposes. OFI did not provide the information requested and therefore, OSA was unable to test compliance with 45 CFR 205.56. In response to the materials provided to OSA by OFI: 1. ?All IEVS discrepancy reports for State fiscal year 2022, containing cases for Medicaid, SNAP, and TANF.? The IEVS discrepancy reports provided by the Department contain cases for Medicaid, SNAP, and TANF, and do not have a specific Federal program indicator to delineate TANF-specific cases. OFI further informed OSA that they did not have the current bandwidth to manually cross-walk the complete list of all TANF eligible recipients against the IEVS discrepancy reports to identify TANF-only cases. OFI insisted that OSA perform the task. Suggesting that OSA crosswalk information to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, the reports provided cannot be utilized for audit testing. 2. ?A complete listing of all TANF cases subject to IEVS in State fiscal year 2022.? This list includes all TANF eligible clients for fiscal year 2022 subject to IEVS; however, not all TANF eligible clients will show up on an IEVS discrepancy report. Therefore, this listing cannot be utilized for audit testing. 3. ?Access to our Automated Client Eligibility System, which documents all IEVS related case notes.? This provides OSA with access to ACES for audit testing purposes. As noted above, OSA was not provided the information requested in order to complete audit testing. Therefore, as detailed in the finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 205.56. The finding remains as stated. (State Number: 22-1111-02)
(2022-069) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.558; 10.557; 93.268 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 228ME000M2003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003; NH23IP922604 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. Condition: The Department did not monitor subrecipients to ensure they were drawing Federal funds in accordance with cash management requirements. For cost-settled subawards, Department procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes. For ?cost-settled by invoice? (reimbursement) subawards, Department procedures do not require obtaining documentation to support the monthly invoices submitted by the subrecipient for costs that were already paid by the subrecipient, thus verifying it was for reimbursement and not advance payment. Context: In fiscal year 2022, the Department provided: ? $17.9 million to subrecipients from TANF grant funds of $81.9 million. TANF?s subawards are either cost-settled, cost-settled by invoice, or fee for service. ? $3.6 million to subrecipients from WIC grant funds of $15 million. All of WIC?s subawards are cost-settled. ? $2.5 million to subrecipients from Immunization Cooperative Agreements grant funds of $23 million. Immunization Cooperative Agreement?s subawards are either cost-settled or cost-settled by invoice. Cause: ? Misinterpretation of Federal regulations. 2 CFR 200.305(b)(1) references that the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity. The Department interpreted this Federal requirement to mean it applied to the State; however, the requirement is directed towards non-Federal entities other than states. ? Lack of adequate subrecipient monitoring procedures. In addition to monitoring the total amount paid to subrecipients, the Department is required to monitor the timing between when the subrecipient receives Federal funds from the Department and when the subrecipient disburses those funds for program purposes. Effect: ? Noncompliance with subrecipient cash management requirements ? Federal programs may not be effectively and efficiently administered. ? The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department implement monitoring procedures to ensure that: ? the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized for cost-settled subawards. ? the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for ?cost-settled by invoice? subawards. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Department reviews budgeted expenses to determine their timing and nature (one time, recurring, allowability); reviews quarterly expense reports and alters payments to meet immediate cash needs, and finally, monitors subrecipient single audits to ensure there are no cash management findings. The Department?s approach is administratively reasonable and does minimize the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes given administrative and operational needs. We believe we have procedures in place that can be corroborated by the fact that our subrecipients do not receive single audit findings related to cash management. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The subrecipient monitoring procedures outlined in Management?s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: ? Reviewing budgeted expenses is not monitoring the subrecipient?s compliance with cash management requirements as the subrecipient has not disbursed the funds yet. ? The Department does not obtain documentation to support the timing of the subrecipient?s expenditures reported on the quarterly expense reports and to substantiate compliance. ? Though reviewing the subrecipient?s Single Audits for findings is beneficial: o the Single Audit is usually completed towards the end or after the grant award period. o it is not guaranteed that cash management will be selected for testing by the subrecipient?s auditor; therefore, relying on the subrecipient?s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient?s compliance with that requirement. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient?s actual disbursement for program purposes is minimized. The finding remains as stated. (State Number: 22-1111-04)
(2022-070) Title: Internal control over TANF client child support sanction procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 264.30; 42 USC 608(a)(2) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. If the Department determines that an individual is not cooperating with child support enforcement requirements, the Department is required to sanction the individual by deducting an amount equal to not less than 25 percent from the TANF assistance that would otherwise be provided to the family of the individual and may deny the family any TANF assistance. Condition: The Department?s Division of Support Enforcement and Recovery (DSER) is responsible for enforcing child support requirements. DSER sends email notifications (sanction requests) to TANF personnel when individuals not cooperating with child support enforcement requirements are identified. If TANF personnel determine that the individual needs to be sanctioned after reviewing the individual?s case, they will process the sanction request in the Automated Client Eligibility System (ACES). Federal guidance requires the Office of the State Auditor (OSA) to develop audit procedures in order to test a sample of cases referred to TANF by DSER. OSA requested a list of sanction requests from DSER for testing purposes. In response to this request, the Department provided 960 email notifications relating to child support sanction requests. OSA selected a random sample of 60 emails from the population for testing and determined the following: ? 35 emails were DSER requests to lift prior sanctions imposed. OSA was unable to determine if the sanction was requested and referred during the fiscal year. ? One email requested a child support affidavit which is not related to child support sanctions. ? One email contained a disability determination review application which is not related to child support sanctions. ? One email requested a child support sanction but omitted client identification information required to process the request. Therefore, OSA was unable to test compliance with sanction requirements for 38 of the 60 emails sampled from the population of sanction requests provided by the Department. OSA selected a non-statistical random sample. Context: DSER personnel transmit sanction requests through email to a general inbox that receives other notifications and collects approximately 400 emails per day. The sanction requests are then forwarded by a designated supervisor to the appropriate TANF personnel to be processed in ACES. Cause: ? Lack of resources. The Department is unable to obtain a complete listing of sanction requests from DSER without dedicating a significant amount of time and resources sorting through the general email inbox. ? Lack of supervisory oversight Effect: ? Noncompliant clients may be paid benefits that they are not entitled to receive. ? Failure to maintain appropriate documentation to demonstrate compliance with Federal program sanction requirements may result in the U.S. Department of Health and Human Services penalizing the State for up to five percent of the grant award. Recommendation: We recommend that the Department establish procedures to ensure that all sanction requests are maintained in a central repository so that they can be easily retrieved for tracking and review purposes. We further recommend that the Department increase oversight to ensure compliance with Federal requirements. Corrective Action Plan: See F-25 Management?s Response: The Department disagrees with this finding. The Office for Family Independence (OFI) has sufficient internal controls in place to ensure compliance with Federal requirements. Specifically, based on the finding?s stated condition, OSA did not take exception with the 22 items that were actually tested for compliance. Additionally, OFI has provided sufficient information for OSA to identify and conduct the audit and compliance testing of cases referred by DSER for sanction. The Department has provided OSA with the following material as requested: 1. The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency. 2. The list of all OFI-TANF clients actually sanctioned by TANF Eligibility. 3. The list of all OFI-TANF clients 4. Copies of all emails pertaining to all sanction activity 5. Access to our Automated Client Eligibility System which includes all documented case notes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: As stated in the Condition, Federal guidance requires OSA to develop audit procedures in order to test a sample of cases referred to TANF by the Title IV-D agency, DSER. In an internal control meeting held on January 11, 2023, between OSA and the Department, the Department identified the control process over sanction requests used by DSER staff after non- compliance by a Custodial Parent (CP) as an email generated by DSER staff that is sent to a general email box at OFI with the subject line of ?Sanction Request?. The Department established that the referral email alerts OFI Eligibility Specialists to the issue and requests OFI to sanction the CP. OSA requested the population of these emails in order to draw a sample for audit testing and was provided a listing of 960 emails from which OSA selected a random sample. OSA tested compliance with sanction requests from the random sample. As a result of this testing, OSA agrees that the population provided by the Department was incorrect. In response to the materials provided to OSA by the Department: 1. ?The list of all sanction referrals generated by OFI-DSER, the Title IV-D agency.? This list was generated based on noncooperation dates entered in the Child Support Enforcement of Maine (CSEME) system; however, the Department confirmed that noncooperation dates are not consistently entered into CSEME by DSER personnel. Therefore, this list cannot be relied upon. 2. ?The list of all OFI-TANF clients actually sanctioned by TANF Eligibility.? This list documents sanction requests that were processed by OFI Eligibility. The list omits requests where OFI eligibility determined a sanction request was not required. Therefore, this list cannot be relied upon. 3. ?The list of all OFI-TANF clients.? This list includes all TANF eligible clients for fiscal year 2022; however, not all TANF eligible clients are sanctioned for child support noncooperation. Therefore, this list cannot be relied upon. 4. ?Copies of all emails pertaining to all sanction activity.? The Department provided OSA with 960 emails that were both sanction and non-sanction related. Suggesting that OSA categorize emails to delineate sanction requests versus other emails in order to prepare a population for audit testing would impair auditor independence. Auditor independence is defined in Government Auditing Standards issued by the Comptroller General of the United States. Therefore, as noted above, this list cannot be relied upon. 5. ?Access to our Automated Client Eligibility System (ACES) which includes all documented case notes.? This provides OSA with access to ACES for audit testing purposes which OSA completed based on the information provided by the Department. Therefore, as detailed in this finding, the Department cannot provide OSA with an accurate population in order to test compliance with 45 CFR 264.30. The finding remains as stated. (State Number: 22-1111-01)
(2022-071) Title: Internal control over TANF subrecipient risk evaluation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of Child and Family Services Division of Contract Management Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in 2 CFR 200.332. Condition: The Department has established subrecipient monitoring procedures depending on whether the subaward is competitively bid or not. If a subaward is competitively bid, the Department seeks input from the Department of Health and Human Services Service Center, and the Department?s Division of Audit and Division of Contract Management regarding known issues with the provider who submitted the bid. Those responses are collected and provided to the evaluation team which consists of various program personnel. The subaward agreement is then drafted and the level of subrecipient monitoring is included in the agreement. If a subaward is not competitively bid, the subaward agreement is drafted based on the level of subrecipient monitoring that the Department has established for the provided services. The Office of the State Auditor (OSA) selected seven TANF subrecipients for testing and found: ? one subrecipient competitively bid on the subaward. The Department was able to provide evidence to support that feedback was solicited from other Bureaus for any known issues or prior noncompliance; however, documentary evidence could not be provided to support the level of subrecipient monitoring that was completed. ? six subrecipients did not competitively bid on the subaward. For those six subrecipients, no documentary evidence could be provided to support the level of subrecipient monitoring that was completed. OSA selected a non-statistical random sample. Context: The Department provided $17.9 million to TANF subrecipients during fiscal year 2022. Cause: Lack of adequate policies and procedures Effect: ? Without a documented process, subrecipient risk evaluation procedures may not be consistently followed, and documentation may not be adequately maintained. ? Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department: ? document procedures that outline the collaborative process with all Bureaus. ? implement policies and procedures that require evaluation of each subrecipient?s risk of noncompliance specifically for the purposes of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-26 Management?s Response: The Department disagrees with this finding. The Department has subrecipient monitoring procedures for all of its subrecipients whether they were competitively bid or not. The first assessment of risk, as noted in the finding, is when a subaward is competitively bid. Secondly, another risk assessment built into the Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP) in which requires higher risk subrecipients to undergo a higher level of testing. Additionally, there are audit and review requirements at a much lower threshold than that of the Uniform Guidance (UG). Finally, the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. The Department?s subrecipient monitoring procedures ensures that we comply with the UG 200.332(d) Pass-through entity (PTE) monitoring of the subrecipient must include: 1) Review of financial and performance reports. 2) Following-up and ensuring that subrecipients take timely and appropriate action on all deficiencies. 3) Issues management decisions. 4) PTE is responsible for resolving audit findings specifically related to the subaward. Based on the Department?s MAAP rules we ensure we comply with UG 200.332(e). Depending on the PTE?s assessment of risk, the following tools may be useful: 1) Training and technical assistance. 2) On-site reviews. 3) Arranging for agreed upon procedures. The Department covers #3 by ensuring that all of our subrecipients have a requirement to submit to the Department a/an Audit, Review or Schedule of Expenditures of Department Awards (SEDA). Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor?s Concluding Remarks: The Department has misinterpreted the Federal regulation cited in this finding. The Department has responded to 2 CFR 200.332(d), which identifies monitoring procedures to be conducted during the subrecipient award period. OSA audited compliance with this during-the-award monitoring requirement and did not identify deficiencies. The Federal regulation that the Department failed to meet is 2 CFR 200.332(b). This regulation identifies procedures to be performed prior to monitoring procedures in order to determine the level of monitoring required for each subrecipient. 2 CFR 200.332(b) states that the Department 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, which may include consideration of factors such as: ? the subrecipient?s prior experience with the same or similar subawards; ? the results of previous audits including whether or not the subrecipient receives a Single Audit, and the extent to which the same or similar subaward has been audited as a major program; ? whether the subrecipient has new personnel or new or substantially changed systems; and ? the extent and results of Federal awarding agency monitoring. The Department did not provide any documentation to support that monitoring procedures performed were based on an evaluation of the subrecipient?s risk of noncompliance. The finding remains as stated. (State Number: 22-1111-05)
(2022-072) Title: Internal control over special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 93.558; 93.323; 93.268; 10.557 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF; NU50CK000523; NH23IP922604; 194ME743W5003, 204ME743W5003, 214ME743W5003, 224ME743W5003, 214ME701W1003, 214ME701W1006, 224ME701W1003, 224ME701W1006, 214ME721W6003, 214ME721W6006, 214ME752W7003, 228ME000M2003 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department erroneously reported subaward data in the FFATA Subaward Reporting System based on individual Federal Award Identification Numbers (FAIN) within subawards; however, the required reporting threshold should have been based on the obligating action represented by the subaward. There can be numerous FAINs within one subaward. Additionally, the Department could not provide evidence that any of the FFATA reports were reviewed prior to submission in the FFATA Subaward Reporting System to ensure the information entered was accurate and complete. Context: During fiscal year 2022, the Department disbursed $35.3 million in first-tier subawards to 75 subrecipients from the TANF, ELC, Immunization Cooperative Agreements, and WIC programs. Of the 75 subrecipients, 62 subrecipients received subawards exceeding the first-tier subaward threshold. These 62 subawards totaled $35.1 million in fiscal year 2022. Cause: ? Misinterpretation of Federal regulations ? Lack of adequate policies and procedures ? Lack of supervisory review Effect: ? Inaccurate, incomplete, and untimely information was and may continue to be reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. ? Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure all subawards that meet or exceed the first-tier subaward threshold are reported accurately, timely, and in accordance with Federal regulations. We further recommend that the Department retain documentation of supervisory review for each FFATA report submitted in the FFATA Subaward Reporting System. Corrective Action Plan: See F-26 Management?s Response: The Department agrees with this finding. The Department implemented the corrective action plan from FY21, and it is currently in place. In summary, the Department revised the standard operating procedure and improved the technology to ensure data accuracy and added a layer of review to ensure accuracy of the FFATA reporting. This was finalized in November of 2022. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 (State Number: 22-1100-01)
(2022-073) Title: Internal control over TANF reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302(b) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements. Condition: The Department is required to submit accurate and complete financial reports to the Federal government. On the SF-425 financial report for the period ending December 31, 2021, cumulative Federal cash disbursements should have been reported in the amount of $54,898,345 instead of $32,885,310. Context: TANF program expenditures totaled $81.9 million in fiscal year 2022. Cause: Lack of supervisory oversight Effect: Noncompliance with Federal reporting requirements Recommendation: Although TANF is no longer required by the Federal government to submit SF-425 reports beginning with the period ending March 31, 2022, we recommend that the Department enhance their review procedures to ensure all financial reports are accurate and complete. Corrective Action Plan: See F-27 Management?s Response: The DHHS and the DHHS Financial Service Center agree with this finding. Effective April 1, 2022, the US Department of Health and Human Services grant recipients are no longer required to complete the quarterly Federal Cash Transaction Report ?FCTR? (also referred to as the FFR-425 or SF-425) to report cumulative Federal cash disbursements. Procedures are currently in place to ensure Federal financial reporting is reviewed accurately. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 22-1100-03)
(2022-074) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-27 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-03)
(2022-075) Title: Internal control over TANF performance reporting and work participation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Reporting Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 45 CFR 261.60 through .62; 45 CFR 265.7 and .8 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain adequate documentation, perform adequate verification, and implement other control procedures for TANF client work participation. Work participation activities include unsubsidized employment, job search and job readiness, job skills training directly related to employment, vocational education, and other work-related programs. The Department must report the actual hours that a work-eligible TANF client participates in these work-related activities, on the ACF-199 TANF Data Report and the ACF-209 SSP-MOE Data Report on a quarterly basis. These reports are required by the Federal government. Condition: The Department reported incorrect work participation information on the ACF-199 and ACF-209 reports. Of the 120 clients tested, inaccurate work participation data was reported for 14 clients, including inaccurate: ? subsidized childcare, ? countable months towards the Federal time limit of 60 months, ? work participation status, ? unsubsidized employment hours, ? and vocational education training hours The Office of the State Auditor selected a non-statistical random sample. Context: The Department must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of information reported to the Federal government and used to calculate work participation rates. In fiscal year 2022, the number of clients reported on the ACF-199 report ranged from approximately 11,000 to 13,000 clients, and the number of clients reported on the ACF-209 report ranged from approximately 36,000 to 38,000 clients. Cause: ? Lack of adequate procedures to ensure work participation data is accurately reflected in the Automated Client Eligibility System (ACES) and Fedcap Customer Assistance for Re- employment and Economic Support (FedcapCARES) case management system, and reported correctly in the quarterly Federal performance reports ? Lack of supervisory oversight Effect: ? Incorrect work participation data reported to the Federal government may affect the Federal requirement for TANF?s State Maintenance of Effort. ? The Federal government may penalize the State by an amount not less than one percent and not more than five percent of the grant award for violation of work verification plan requirements. Recommendation: We recommend that the Department enhance existing procedures to ensure that the information reported on the ACF-199 and ACF-209 reports is accurate and complete prior to submission to the Federal government. This should include increased systemic monitoring to improve the reliability of work participation data that is reported to the Federal government. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Department acknowledges eight of the fourteen cases cited as containing errors. Significant improvements have been made to the systemic monitoring of the ACF-199 and ACF-209 reports as evidenced by recent edits to the standard operating procedures governing this system in February and May of 2022. Due to the nature of corrective action plans, and the timing of the state audit, the Department does not believe a corrective action plan is warranted at this time. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1111-06)
(2022-076) Title: Internal control over TANF subrecipient audit procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.558 Federal Award Identification Number: 1901METANF, 2001METANF, 2101METANF Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When a subrecipient?s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year, the Department must verify that the subrecipient is audited. Condition: The Department requires subrecipients to submit their Single Audit to the Department?s Division of Audit. The Division maintains a database to track when subrecipient Single Audit reports are due and ensures that they are received. The Office of the State Auditor (OSA) tested four TANF subrecipients that had a Single Audit due in fiscal year 2022 for compliance with Federal regulations and found that the Division did not obtain the Single Audit for one subrecipient. The Division could not provide documentation to support that they contacted the subrecipient when the Single Audit was late. OSA was able to confirm that the subrecipient did have a Single Audit as required. Context: A Single Audit was due in fiscal year 2022 for eight TANF subrecipients that received $28.2 million of Federal funds in fiscal year 2021. Cause: ? Lack of adequate procedures ? Lack of supervisory oversight Effect: Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance existing procedures to ensure that subrecipients that expend $750,000 or more in Federal awards complete and submit a Single Audit within the required time requirements. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. We will revise our standard operating procedures (SOP) to include the search for out of state subrecipients on the Federal Audit Clearinghouse. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 (State Number: 22-1100-02)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-046) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Health and Human Services U.S. Department of Defense Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Immunization Cooperative Agreements (COVID-19) Child Support Enforcement National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 17.225; 93.268; 93.563; 12.401 Federal Award Identification Number: Unemployment Insurance Trust Fund, Maine, UI347192055A23, UI372842255A23, UI359482160A23, UI372272255A23, UI356522155A23, UI348602055A23, UI340622055A23; NH23IP922604; 2001MECSES, 2101MECSES, 2201MECSES; W912JD-19-2-1001, W912JD-19-2-1005, W912JD-20-2-1001, W912JD-20-2-1002, W912JD-20-2-1003, W912JD-20-2-1007, W912JD-20-2-1010, W912JD-21-2-1001, W912JD-21-2-1002, W912JD-21-2-1003, W912JD-21-2-1004, W912JD-21-2-1007, W912JD-21-2-1010, W912JD-21-2-1021, W912JD-21-2-1022, W912JD-21-2-1023, W912JD-21-2-1024, W912JD-21-2-1040, W912JD-22-2-1001, W912JD-22-2-1002, W912JD-22-2-1003, W912JD-22-2-1004, W912JD-22-2-1007, W912JD-22-2-1010, W912JD-22-2-1021, W912JD-22-2-1022, W912JD-22-2-1023, W912JD-22-2-1024, W912JD-22-2-1040, W912JD-22-2-2010 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies. Condition: The Bureau of Human Resources (BHR) employs Functional Job Analysis (FJA) reports to summarize each State employee?s position duties and responsibilities, and to assign the position to a classification and salary grade representing reasonable compensation for services rendered by the position. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal grant awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointment was made and maintained in accordance with State statute. BHR maintains the position classification specifications and related compensation plan of State employees. Periodic review of position classifications, including required duties and responsibilities, are completed by individual agency personnel through the following processes: ? Annual performance reviews as required by the Performance Management System and related forms which include detail of position duties and responsibilities ? Hiring justification forms completed by agency heads to attest to the duties and responsibilities of positions being filled ? Review and approval of job vacancy announcements prior to advertisement which reflect the duties and responsibilities of the position?s FJA on file These processes have been established to ensure that documented duties and responsibilities of all State employee positions are accurate and up to date. These processes are the responsibility of individual agencies; however, BHR is responsible for the oversight to ensure that agencies are completing the established processes accurately and timely. BHR does not have policies and procedures that require a documented level of oversight or monitoring of agency-level activities. Context: During fiscal year 2022, $122 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2022 Statewide payroll expenditures, which totaled $1.2 billion. Cause: ? Competing priorities ? Lack of resources ? Lack of adequate policies and procedures Effect: ? State employee job classification and compensation may not accurately reflect current duties and responsibilities of each position. As a result, payroll costs charged to Federal awards may not be supported. ? Without documented evidence that these activities are occurring, BHR cannot ensure that the classification and compensation plan of all State employee positions is maintained and properly supported by documentation that accurately reflects the job duties and responsibilities of each position. Recommendation: We recommend that the Department implement additional policies and procedures to ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. Corrective Action Plan: See F-18 Management?s Response: The Department partially agrees with this finding. In addition to the three bullets noting how BHR conducts reviews of position classifications, BHR also conducts the following: ? management submits a management-initiated FJA when a position's duties are being significantly changed, and that FJA is audited by BHR to determine the correct classification; ? an employee may submit an employee-initiated FJA if they believe they are working out of classification, and the FJA will be audited by BHR for determination of the correct classification; and ? classification specifications are reviewed periodically by BHR to determine accuracy and make any changes (this includes when BHR reviews a classification for recruitment and retention purposes). Contact: Breena D. Bissell, Director, Bureau of Human Resources, DAFS, 207-215-0886 Auditor?s Concluding Remarks: The Office of the State Auditor recognizes the additional processes conducted by BHR noted in Management?s Response; however, the existing policies and procedures do not ensure proper oversight and monitoring of agency-level activities related to position duties and responsibilities and maintenance of the State classification and compensation plan. The finding remains as stated. (State Number: 22-0111-01)
(2022-047) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-18 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-02)
(2022-077) Title: Internal control over Child Support Enforcement expenditures needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Child Support Enforcement Assistance Listing Number: 93.563 Federal Award Identification Number: 2001MECSES, 2101MECSES, 2201MECSES Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 2 CFR 200.403; Cooperative Agreement Between State of Maine DHHS and Maine State Judicial Branch for State Fiscal Years 2022 and 2023, Section V (b)(1) The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?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 determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Except where otherwise authorized by statute, costs must conform to any limitations or exclusions set forth in cost principles or in the Federal award as to types or amount of cost items. The Administrative Office of the Courts (AOC) under the Judicial Branch must provide a report to the Department of Health and Human Services? (DHHS) Division of Support and Recovery (DSER) for all Judicial Branch estimated expenditures. This report must detail costs that are eligible for Federal financial participation and must be provided within 35 calendar days after the close of the quarters ending in March, June, September, and December. These estimated expenditures are calculated using the per minute rate that was in effect for the prior fiscal year. Within 35 days after the close of the State fiscal year, the AOC will update the per minute rate and provide DSER a report with actual expenditures for the State fiscal year. Condition: The Child Support Enforcement (CSE) program is administered by DSER within DHHS. DHHS has a cooperative agreement with AOC that defines roles, relationships, and responsibilities of the parties, and sets forth a basis for financial reimbursement for court services provided to DHHS by AOC. These services include conducting paternity hearings; hearings to establish, modify, or enforce support orders; civil and criminal complaint hearings related to CSE; providing mediation services; and conducting proceedings related to income withholding responsibilities. AOC sends monthly invoices to the DHHS Service Center (DHHS SC) with estimated costs for work performed for the CSE program. DHHS SC is responsible for transferring funds from the CSE program to AOC. On a quarterly basis, AOC provides DHHS SC with a reconciliation of estimated costs to actual costs. This quarterly reconciliation utilizes the per minute rate that was in effect for the prior fiscal year and is due 35 days after the close of the quarter. Annually, the per minute rate is updated and AOC provides DHHS SC with a final report of actual costs with the updated per minute rate. This final report is due within 35 days after the close of the fiscal year. The Office of the State Auditor (OSA) selected six transfers from DHHS SC to AOC for testing and found that costs incurred for court services were not adequately supported. DHHS SC did not receive two quarterly reports from AOC; therefore, court expenditures were based on estimated costs rather than actual costs. Furthermore, the annual report and reconciliation of estimated costs to actual costs was not completed until five months after the fiscal year end. As a result, expenditure amounts reported by the CSE program are not based on actual costs. OSA reviewed the annual reconciliation and determined that the variance is not material to the program. OSA selected a non-statistical random sample. Context: The CSE program expended $18.8 million in Federal funds during fiscal year 2022, of which $2.2 million was used for court services. Cause: Management override of controls. The program elected to defer reconciling estimated costs to actual costs until the per minute rate was updated by AOC. Effect: CSE program expenditures for fiscal year 2022, specifically relating to AOC expenditures, were understated by the amount included in the annual reconciling invoice for AOC. Recommendation: We recommend that the Department enhance oversight of established procedures to ensure that CSE is in compliance with Federal regulations. Corrective Action Plan: See F-27 Management?s Response: The Department agrees with this finding. The Division of Support Enforcement and Recovery and the Judicial Branch will modify the language of the cooperative agreement to clarify that all allowable costs subject to federal financial participation are adequately and timely documented. Contact: Jerry Joy, Director, Division of Support Enforcement and Recovery, DHHS, 207-624-6985 (State Number: 22-1128-02)
(2022-078) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-28 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-03)
(2022-079) Title: Internal control over the CCDF Cluster eligibility determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: 2101MECCDF, 2001MECCDF, 2101MECCC5, 2001MECCC3, 2101MECDC6, 2101MECSC6 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The Child Care and Development Fund (CCDF) provides child-care benefits to parents based on financial and program eligibility factors. Eligibility for benefits is determined based on application information from families that is manually entered into the Maine Automated Child Welfare Information System (MACWIS) by Department personnel. Once the application information has been entered, computerized eligibility determinations are processed through MACWIS. There is no secondary review of manually entered application information prior to initiation of computerized eligibility determinations. The Department does not have a process in place to ensure information entered into MACWIS is accurate and in agreement with paper application information prior to eligibility determinations and resulting benefit payments. While the Department does have subsequent monitoring procedures in place, this does not prevent the potential utilization of inaccurate information for eligibility determination. Context: In fiscal year 2022, the Department processed 6,862 family applications and provided $46.3 million in benefits under programs within the CCDF Cluster. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: Inaccurate information manually entered into MACWIS could result in individuals not eligible for services being deemed eligible or eligible individuals being deemed ineligible. Recommendation: We recommend that the Department implement policies and procedures that require a review of manually entered CCDF program application information prior to eligibility determinations. Corrective Action Plan: See F-28 Management?s Response: The Department of Health and Human Services (DHHS) management disagrees with the audit finding that the CCDF program is not meeting requirements identified in 2 CFR 200.303 Internal controls, (a). DHHS believes the current internal controls that are in place provide reasonable assurance that DHHS is managing federal funds in compliance with all regulations. Although ?reasonable? is not defined, DHHS believes it is effectively meeting the Administration for Children and Families? (ACF) expectations, as the funding source, as well as meeting the Child Care Development Fund (CCDF) grant goals and objectives. ACF approved Maine?s FFY22-24 CCDF State Plan which includes a description of OCFS? internal control activities. The potential effect or risk identified by OSA is that without implementing a secondary review of all data entry in the income field, individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible which would result in Improper Payments. In the last quarter of FFY 2022, the Improper Payments rate was 3.37%, well below the federal threshold of 10%. Inaccurate data entry was not noted as a significant cause of Improper Payments. Contact: Todd Landry, Director, Office of Child and Family Services, DHHS, 207-624-7900 Auditor?s Concluding Remarks: The monitoring procedures outlined in Management?s Response do not include specific controls to ensure that the information entered into MACWIS is accurate and in agreement with paper application information prior to making eligibility determinations. The risk that improper payments will be made or that benefits will be denied for families that should have been deemed eligible would be mitigated by establishing a secondary review of manually entered application information. As part of the fiscal year 2022 audit, OSA reviewed the ACF-404 State Improper Payments Report submitted in August 2021. This report identified a 14.49 percent improper payment rate in the cases reviewed. In addition, 24.64 percent of cases reviewed contained erroneous case information. In response to the significant error rates identified in the report, the Department was required to prepare and submit a comprehensive corrective action plan. As stated in the ACF-404, corrective action was initiated in October 2021; therefore, the control deficiencies existed for several months during fiscal year 2022. The improper payment rate of 3.37 percent included in Management?s Response relates to the quarter ending September 30, 2022, which was after the required corrective action and also outside of the audit period. The report submitted during the audit period, along with the required corrective action, validates the necessity for enhanced control procedures to prevent utilization of inaccurate case information in eligibility determinations. The finding remains as stated. (State Number: 22-1114-01)
(2022-078) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-28 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-03)
(2022-079) Title: Internal control over the CCDF Cluster eligibility determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: 2101MECCDF, 2001MECCDF, 2101MECCC5, 2001MECCC3, 2101MECDC6, 2101MECSC6 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The Child Care and Development Fund (CCDF) provides child-care benefits to parents based on financial and program eligibility factors. Eligibility for benefits is determined based on application information from families that is manually entered into the Maine Automated Child Welfare Information System (MACWIS) by Department personnel. Once the application information has been entered, computerized eligibility determinations are processed through MACWIS. There is no secondary review of manually entered application information prior to initiation of computerized eligibility determinations. The Department does not have a process in place to ensure information entered into MACWIS is accurate and in agreement with paper application information prior to eligibility determinations and resulting benefit payments. While the Department does have subsequent monitoring procedures in place, this does not prevent the potential utilization of inaccurate information for eligibility determination. Context: In fiscal year 2022, the Department processed 6,862 family applications and provided $46.3 million in benefits under programs within the CCDF Cluster. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: Inaccurate information manually entered into MACWIS could result in individuals not eligible for services being deemed eligible or eligible individuals being deemed ineligible. Recommendation: We recommend that the Department implement policies and procedures that require a review of manually entered CCDF program application information prior to eligibility determinations. Corrective Action Plan: See F-28 Management?s Response: The Department of Health and Human Services (DHHS) management disagrees with the audit finding that the CCDF program is not meeting requirements identified in 2 CFR 200.303 Internal controls, (a). DHHS believes the current internal controls that are in place provide reasonable assurance that DHHS is managing federal funds in compliance with all regulations. Although ?reasonable? is not defined, DHHS believes it is effectively meeting the Administration for Children and Families? (ACF) expectations, as the funding source, as well as meeting the Child Care Development Fund (CCDF) grant goals and objectives. ACF approved Maine?s FFY22-24 CCDF State Plan which includes a description of OCFS? internal control activities. The potential effect or risk identified by OSA is that without implementing a secondary review of all data entry in the income field, individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible which would result in Improper Payments. In the last quarter of FFY 2022, the Improper Payments rate was 3.37%, well below the federal threshold of 10%. Inaccurate data entry was not noted as a significant cause of Improper Payments. Contact: Todd Landry, Director, Office of Child and Family Services, DHHS, 207-624-7900 Auditor?s Concluding Remarks: The monitoring procedures outlined in Management?s Response do not include specific controls to ensure that the information entered into MACWIS is accurate and in agreement with paper application information prior to making eligibility determinations. The risk that improper payments will be made or that benefits will be denied for families that should have been deemed eligible would be mitigated by establishing a secondary review of manually entered application information. As part of the fiscal year 2022 audit, OSA reviewed the ACF-404 State Improper Payments Report submitted in August 2021. This report identified a 14.49 percent improper payment rate in the cases reviewed. In addition, 24.64 percent of cases reviewed contained erroneous case information. In response to the significant error rates identified in the report, the Department was required to prepare and submit a comprehensive corrective action plan. As stated in the ACF-404, corrective action was initiated in October 2021; therefore, the control deficiencies existed for several months during fiscal year 2022. The improper payment rate of 3.37 percent included in Management?s Response relates to the quarter ending September 30, 2022, which was after the required corrective action and also outside of the audit period. The report submitted during the audit period, along with the required corrective action, validates the necessity for enhanced control procedures to prevent utilization of inaccurate case information in eligibility determinations. The finding remains as stated. (State Number: 22-1114-01)
(2022-078) Confidential finding, see below for more information Title: over and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-28 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0906-03)
(2022-079) Title: Internal control over the CCDF Cluster eligibility determination process needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster (COVID-19) Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: 2101MECCDF, 2001MECCDF, 2101MECCC5, 2001MECCC3, 2101MECDC6, 2101MECSC6 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The Child Care and Development Fund (CCDF) provides child-care benefits to parents based on financial and program eligibility factors. Eligibility for benefits is determined based on application information from families that is manually entered into the Maine Automated Child Welfare Information System (MACWIS) by Department personnel. Once the application information has been entered, computerized eligibility determinations are processed through MACWIS. There is no secondary review of manually entered application information prior to initiation of computerized eligibility determinations. The Department does not have a process in place to ensure information entered into MACWIS is accurate and in agreement with paper application information prior to eligibility determinations and resulting benefit payments. While the Department does have subsequent monitoring procedures in place, this does not prevent the potential utilization of inaccurate information for eligibility determination. Context: In fiscal year 2022, the Department processed 6,862 family applications and provided $46.3 million in benefits under programs within the CCDF Cluster. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight Effect: Inaccurate information manually entered into MACWIS could result in individuals not eligible for services being deemed eligible or eligible individuals being deemed ineligible. Recommendation: We recommend that the Department implement policies and procedures that require a review of manually entered CCDF program application information prior to eligibility determinations. Corrective Action Plan: See F-28 Management?s Response: The Department of Health and Human Services (DHHS) management disagrees with the audit finding that the CCDF program is not meeting requirements identified in 2 CFR 200.303 Internal controls, (a). DHHS believes the current internal controls that are in place provide reasonable assurance that DHHS is managing federal funds in compliance with all regulations. Although ?reasonable? is not defined, DHHS believes it is effectively meeting the Administration for Children and Families? (ACF) expectations, as the funding source, as well as meeting the Child Care Development Fund (CCDF) grant goals and objectives. ACF approved Maine?s FFY22-24 CCDF State Plan which includes a description of OCFS? internal control activities. The potential effect or risk identified by OSA is that without implementing a secondary review of all data entry in the income field, individuals not eligible for services could be deemed eligible or eligible individuals could be deemed ineligible which would result in Improper Payments. In the last quarter of FFY 2022, the Improper Payments rate was 3.37%, well below the federal threshold of 10%. Inaccurate data entry was not noted as a significant cause of Improper Payments. Contact: Todd Landry, Director, Office of Child and Family Services, DHHS, 207-624-7900 Auditor?s Concluding Remarks: The monitoring procedures outlined in Management?s Response do not include specific controls to ensure that the information entered into MACWIS is accurate and in agreement with paper application information prior to making eligibility determinations. The risk that improper payments will be made or that benefits will be denied for families that should have been deemed eligible would be mitigated by establishing a secondary review of manually entered application information. As part of the fiscal year 2022 audit, OSA reviewed the ACF-404 State Improper Payments Report submitted in August 2021. This report identified a 14.49 percent improper payment rate in the cases reviewed. In addition, 24.64 percent of cases reviewed contained erroneous case information. In response to the significant error rates identified in the report, the Department was required to prepare and submit a comprehensive corrective action plan. As stated in the ACF-404, corrective action was initiated in October 2021; therefore, the control deficiencies existed for several months during fiscal year 2022. The improper payment rate of 3.37 percent included in Management?s Response relates to the quarter ending September 30, 2022, which was after the required corrective action and also outside of the audit period. The report submitted during the audit period, along with the required corrective action, validates the necessity for enhanced control procedures to prevent utilization of inaccurate case information in eligibility determinations. The finding remains as stated. (State Number: 22-1114-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-015) Confidential finding, see below for more information Title: ________ over ________ within the ________ and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-9 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0902-01)
(2022-016) Confidential finding, see below for more information Title: ________ over the ________, ________, and ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0903-02)
(2022-017) Confidential finding, see below for more information Title: ________ over ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-01)
(2022-018) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-10 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0900-02)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-080) Title: Internal control over Long Term Care Facility audits needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 447.253(g); MaineCare Benefits Manual, Chapter III, Sections 50 and 67 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to provide for the periodic audits of the financial and statistical records of participating providers. The MaineCare Benefits Manual (MCBM) Chapter III, Sections 50 and 67 outline the documentation and support required to be included in a provider?s annual cost report filing submission to the Division of Audit. The Division of Audit?s requirements for reviewing the cost reports and performing uniform desk reviews is also outlined. Section 67 states that the Division of Audit must perform a uniform desk review on each Nursing Facility (NF) cost report submission within 365 days of receipt of an acceptable cost report filing. Condition: The Division of Audit did not issue Long Term Care Facility (LTCF) audits in accordance with Federal regulations. LTCF audits include both audits of NFs and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs). LTCF ? Nursing Facilities The MCBM states uniform desk reviews shall be completed within 365 days after receipt of an acceptable cost report filing, including financial statements and other information requested from the provider except in unusual situations including, but not limited to, delays in obtaining necessary information from a provider. Unless the Division of Audit intends to schedule an on- site audit or an unusual situation referenced above exists, a written summary report of findings and adjustments shall be issued upon completion of the uniform desk review. The population of NF uniform desk reviews due for issuance in fiscal year 2022 was 140. Of those 140 uniform desk reviews, one was issued timely, 49 were issued 47 to 487 days late, and 90 had not been issued at the time of audit testing. LTCF ? ICF/IIDs The MCBM requires providers to submit cost reports annually based on the facility?s fiscal year end. 42 CFR 447.253(g) states ?[the agency] must provide for the periodic audits of the financial and statistical records of participating providers.? Furthermore, 2 CFR 200.303 requires a non- Federal agency to ?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.? Neither 42 CFR nor the MCBM specifies a specific timeframe to complete an audit of a ICF/IID cost report. The Division of Audit has stated its understanding of the periodic requirement to be that all ICF/IID cost report audits must be completed ?at some point in time.? The Department has audit responsibilities over 16 ICF/IID facilities. The Division of Audit issued 12 audits during fiscal year 2022. Of those 12 audits, 9 were issued in under 365 days, and 3 were issued in a range of 497 to 505 days after receipt of the cost report. Context: The Department provided $316.1 million in Federal Medicaid funding and $84.5 million in State Medicaid funding to LTCFs during fiscal year 2022 as follows: ? Nursing Facilities: o $286.2 million in Federal funding o $84.5 million in State funding ? ICF/IID: o $29.9 million in Federal funding Cause: ? Lack of resources ? Lack of explicit guidance regarding the timeframe for LTCF audit issuance ? The Department asserts that the State is in compliance with timeframe requirements for ICF/IID audit issuance. Effect: Noncompliance with Federal and State regulations Recommendation: We recommend that the Department reallocate resources to address the backlog of audits and uniform desk reviews. Timely audit issuance will minimize the impact on providers of potential payables and receivables. We further recommend that the Department update the MCBM to provide an explicit timeframe for issuance of ICF/IID audits in line with NFs. Corrective Action Plan: See F-29 Management?s Response: The Department agrees with this finding in regard to LTCF - Nursing Facilities. The delay in completing the Nursing Facilities audits is the result of staff shortages and competing priorities due to COVID-19 activities, such as reconciling outbreak payments. Once the Public Health Emergency (PHE) officially ends, the staff assigned to COVID-19 related activities will be reassigned to LTCF audits, which will help with more timely processing. The Department disagrees with this finding in regard to LTCF - ICF/IID?s. The ICF/IID audits do not have a specific time requirement in the MBM for completion. The federal regulations only require that periodic audits of financial records occur. All ICF/IID cost reports submitted to the Department are recorded in a database and tracked for audit purposes. All cost reports are audited as resources are available. We have worked with our Federal partners who have agreed with our interpretation of the regulation and the timing of our audits for the ICF/IIDs. Contact: Herb Downs, Director, Division of Audit, DHHS, 207-287-2778 Auditor?s Concluding Remarks: 42 CFR 447.253(f-g) states ?[the agency] must provide for the periodic filing of uniform cost reports by each participating provider [and] periodic audits of the financial and statistical records of participating providers.? The Department is correct in its assertion that the regulation does not define a timeframe for either the filing of uniform cost reports by providers or the audit of financial and statistical records; however, the following factors must be considered: ? MCBM Chapter III, Section 50 (ICF/IIDs) states the following: o ?All long-term care facilities are required to submit annual cost reports,? and o ?The cost report and financial statements for each facility shall be filed no later than five (5) months after the fiscal year end of the provider.? ? MCBM Chapter III, Section 67 (NFs) states the following: o ?Each long-term care facility in Maine must submit an annual cost report within five (5) months of the end of the fiscal year,? o ?The Division of Audit shall perform a uniform desk review on each cost report submitted,? and o ?Uniform desk reviews shall be completed within three hundred and sixty-five (365) days after the receipt of an acceptable cost report filing.? ICF/IIDs are LTCFs. Though the language regarding audit timeframe is omitted from MCBM Chapter III, Section 50 (ICF/IIDs), it is reasonable to conclude that all LTCFs, including ICF/IIDs, must submit cost reports annually and the Department must perform LTCF audits annually. ? The Department?s interpretation that there is no deadline for performing audits of the financial and statistical records of certain classifications of LTCFs leads to an open-ended timeframe where audits of LTCF cost reports are never required to be completed. As noted in the preceding bullet, this is inconsistent with other LTCF sections of the MCBM. ? The Department requires that providers submit cost reports annually. The periodic audit of a facility?s financial and statistical records should follow the same pattern as the periodic submission of those financial and statistical records. Failure to do so leads to delays in identifying funds due to or due from the provider, which could lead to financial hardship for the facility and threaten the care Medicaid clients receive. o Delays in identifying funds due from a facility postpone recoupment of overpayments by the State and postpone Federal reimbursement for those funds. o Delays in performing audits prevents the Department from providing reasonable assurance that the Department is managing the Federal award as required by 2 CFR 200.303. In addition to reallocating resources to address the backlog of audits, OSA continues to recommend that the Department update the MCBM to align financial and statistical reporting and auditing requirements across all LTCFs, including ICF/IIDs. This will serve to mitigate the risks posed by these delays. The finding remains as stated. (State Number: 22-1106-04)
(2022-081) Title: Internal control over cases opened due to potential fraud, abuse, or questionable practices needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 455.13 through .15; MaineCare Benefits Manual, Sections 1.17 and 1.18 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. When the State Medicaid Agency receives a complaint of Medicaid fraud or abuse, or identifies questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. Additionally, if the preliminary investigation is indicative of fraud, waste, or abuse, the State Medicaid Agency must take appropriate actions to fully investigate the abuse and/or refer the case to the Medicaid Fraud Control Unit. Condition: The Office of the State Auditor (OSA) judgmentally selected 12 cases related to potential fraud, abuse, or questionable practices based upon the age of the case or the amount of identified recoupment. In OSA?s test of 12 cases, 7 cases were found to be inactive for an extended period, ranging from 314 to 1,738 days. Of the remaining population of cases, a non-statistical random sample of 60 cases was selected. In OSA?s test of 60 cases, 5 cases were found to be inactive for an extended period, ranging from 275 to 828 days. There was no evidence of monitoring or supervisory review during these extended periods. Context: In fiscal year 2022, the State paid $3.9 billion to providers, including $2.9 billion in Federal funds. Cause: ? Lack of resources ? Lack of procedures to ensure that cases are continually monitored Effect: ? Fraud, abuse or questionable practices may remain undetected. ? Costs that should be recovered may not be identified. Recommendation: We recommend that the Department establish procedures to identify inactive cases to ensure case reviews and investigations are completed in accordance with regulatory requirements and Department procedures. Corrective Action Plan: See F-29 Management?s Response: The Department agrees that the cases identified lacked documentation to support the reason for periods of non-activity. However, the Department notes that 7 of the 12 cases identified by the Auditor either had been closed or had findings issued prior to the Department?s receipt of the sample list from the Auditor. Two of the remaining five cases were cases where the assigned staffer left the unit. Those two cases have been reassigned to current staff and are presently being worked. The remaining three cases were instances where the Program Integrity reviewer left their position and were no longer available to handle the cases. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-06)
(2022-082) Title: Internal control over the eligibility determination process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services U.S. Department of Agriculture Assistance Listing Title: Medicaid Cluster (COVID-19) Children?s Health Insurance Program (CHIP) (COVID-19) SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778; 93.767; 10.551, 10.561; 93.558 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP; 2005ME5021, 2105ME5021; SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Questioned Costs: None Criteria: 2 CFR 200.303 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Condition: The Department did not have a documented process in place throughout fiscal year 2022 to ensure information entered into the Automated Client Eligibility System (ACES) is accurate and complete. Eligibility specialists manually enter information into ACES and initiate computerized eligibility determinations. Documentation supports that there is no process in place to ensure the accuracy of manually entered data used in eligibility determinations. Supervisors perform a case review of one eligibility determination per eligibility specialist per month. Supervisors and senior program management have the ability to monitor phone interactions between eligibility specialists and clients in real time. In June 2022, the Department fully implemented a new supervisory case reading system. Components of the formal case review include a review of the accuracy of data entry and resulting eligibility determinations, and appropriateness of processes. The system also serves as a formalized tracking tool for supervisory case readings. However, the Department does not have a process in place to review a random selection of cases, track specific issues identified in the reviews, identify common errors, and determine if those errors have a broader impact on eligibility determinations. Cases subject to review are judgmentally selected by supervisors. With approximately 300 eligibility specialists, case reviews are only performed for approximately one percent of all eligibility determinations. Identified errors are corrected in individual case files, but the results of case reviews are not monitored to identify common issues. In response to the COVID-19 Public Health Emergency (PHE) during fiscal year 2020, Federal oversight agencies waived the requirements for certain eligibility criteria and eligibility determination procedures. These waivers remained in effect throughout fiscal year 2022. As a result, the Department?s risk of noncompliance with eligibility determination criteria was significantly reduced. Conversely, as the PHE-related waivers expire, the risk of noncompliance will increase. The Office of the State Auditor (OSA) issued three other related findings: 2022-025, Internal control over automated SNAP eligibility determinations and benefit calculations needs improvement; 2022-083, over needs improvement; and 2022-085, Internal control over cost of care assessments needs improvement. Context: In fiscal year 2022, the State provided approximately: ? 421,000 Medicaid/CHIP clients with $2.9 billion in Federal benefits; ? 119,000 SNAP clients with $466 million in Federal benefits; and ? 16,000 TANF clients with $35 million in Federal benefits. Cause: Lack of adequate procedures to prevent, or detect and correct, errors and inaccuracies affecting the overall population of eligibility determinations Effect: ? Individuals not eligible for services could be determined eligible or eligible individuals could be deemed ineligible. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department enhance formal case review procedures to include a systematic, random selection of cases for review. This will ensure that a representative sample of eligibility determinations are objectively reviewed. We further recommend that the Department implement procedures to track errors and inaccuracies identified through the review process, determine common issues and areas of concern, and apply those results to the broader population of eligibility determinations. This will ensure that eligibility determinations are performed accurately. Corrective Action Plan: See F-30 Management?s Response: The Department disagrees with this finding. The systems we have in place are both necessary and sufficient in meeting programmatic requirements to ensure accurate eligibility determinations are being made. There has been no citation of federal regulation provided by OSA during this review that contradicts this. The Department would like to note: 1. Supervisors do a minimum of 1 case reading per month and a minimum of 1 call monitoring per week for staff on phones. It is commonplace for them to do more, especially for a new employee, or known coaching issues. 2. These case readings were tracked by supervisors and units and were tracked centrally on our Streamline Management Y- Drive in SFY2022. 3. Phone calls can be referenced by Supervisors in real time or afterwards, via recording. 4. Specifics of case reading, and call monitoring were formalized with specific expectations in multiple categories, which were followed up on by coaching staff if not all of the expectations were met. With a goal of continuous improvement, it was also noted to the OSA that we formally implemented the Calabrio System which dramatically enhanced and further automated our ability to track Case Readings and Call Monitoring performance statewide in June of 2022. A corresponding user guide was also developed and implemented in June of 2022. This example of continuous quality improvement has led to a more holistic understanding of trends and training needs. Furthermore, SNAP cases are randomly selected and reviewed by USDA partially-funded SNAP Quality Control staff. These findings are reported monthly to FNS and OFI senior management. A team of QC, training, program, operations, business technology and senior management meet bi-weekly to review trends and implement solutions. These have included technological enhancements, reminder e-mails, targeted trainings, and pop quizzes. While this effort focuses on SNAP, the vast majority of SNAP cases also involve MaineCare, and some include TANF. Solutions for one program typically aid all. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Calabrio System was implemented in the final month of the fiscal year; therefore, the system was not in place for the majority of the fiscal year. OSA requested evidence to support the Department?s tracking of deficiencies identified through case reading and call monitoring procedures, the application of those results to the broader population of eligibility determinations to track the frequency and cause of deficiencies, and the implementation of broad-based corrective action taken in response to those findings. The Department did not provide evidence that this occurred. The Department did not demonstrate the establishment and maintenance of effective internal control over the Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards as required by 2 CFR 200.303. The finding remains as stated. (State Number: 22-1106-01)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-084) Title: Internal control over Medicare Part B premium payments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of Information Technology Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 42 CFR 431.625 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 42 CFR 431.625 outlines eligibility criteria which, if met, allows the State to pay a portion of the Federal Medicare Part B premium on behalf of the client and claim Federal financial participation in the payment. Clients may be deemed eligible by the Federal government as indicated by a Federal Buy-In code, or by the State as indicated by eligibility status in the Automated Client Eligibility System (ACES). Condition: The Department receives monthly invoices from the Centers for Medicare and Medicaid Services (CMS) for Medicare Part B premiums. CMS provides a separate detailed listing of Medicaid clients that supports the invoice to the Office of Information Technology (OIT). OIT produces a Monthly Reconciliation Report identifying potential discrepancies between the CMS detailed listing and the Department?s eligibility information recorded in ACES. Office for Family Independence personnel use this reconciliation report to identify clients for whom payment should not be made. In the Office of the State Auditor?s (OSA) test of the 12 Monthly Reconciliation Reports required in fiscal year 2022, completion of review or documentation of corrective action could not be provided for two reports. In OSA?s sample of 60 premium payments: ? two premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice but were coded not eligible in ACES. ? two premiums were paid by the Department on behalf of clients who were coded eligible in ACES but were not included on the CMS invoice. ? one premium was paid by the Department on behalf of a client who was not coded eligible in ACES and was not included on the CMS invoice. ? seven premiums were paid by the Department on behalf of clients who were coded eligible on the CMS invoice and in ACES; however, discrepancies existed between their Federal and State Buy-In eligibility codes. The Monthly Reconciliation Report did not identify these discrepancies. However, additional OSA procedures determined that the clients were eligible and the payments were allowable. OSA selected a non-statistical random sample. Context: In fiscal year 2022, $121 million in Federal funds and $51 million in State funds were paid to CMS for Medicare Part B premiums. Cause: ? Lack of supervisory oversight ? The Monthly Reconciliation Report is not adequately designed to identify all discrepancies. Effect: ? Potential Medicare Part B premiums paid by the State for ineligible clients ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure the review and follow up to Monthly Reconciliation Reports, and that the Department improve procedures for the documentation of those reports. We further recommend that the Department design the Monthly Reconciliation Report to identify all discrepancies. Corrective Action Plan: See F-30 Management?s Response: The Departments agree with this finding. We continue to address this repeat finding as evidenced by substantial edits to our current business practice and the SOP governing Medicare Part B Buy-in reconciliation effective March 10, 2022. Existing work on the SOP development includes the incorporation of a recent CMS implemented web-portal tool to address Medicare Part B Buy-in discrepancies known as ELMO, a tool we are already leveraging. Work continues to include Information Technology processes in order to determine where system changes may enhance and further automate reconciliation for individuals with SSI and Medicare premium changes. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-03)
(2022-085) Title: Internal control over cost of care assessments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: Undeterminable. Incorrectly calculated cost of care (COC) assessments may result in an overpayment or underpayment to the providers when the State makes a payment for long-term care. Since there is not always a claim for every assessment, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 42 CFR 435.725; MaineCare Eligibility Manual, Part 14, Section 6 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must reduce its payment to an institution for service provided to an individual by the amount that remains after deducting certain amounts from the member?s total income. This remaining amount is the member?s maximum share of the cost, known as COC. Condition: A COC assessment represents the required contribution that a MaineCare recipient must pay toward care in a Long Term Care Facility. The Office for Family Independence (OFI) is responsible for calculating COC assessments for Medicaid for all members in the State. COC assessments are either calculated by the Automated Client Eligibility System (ACES) or calculated manually by eligibility specialists. System generated COC assessments are not subject to secondary review. A COC deduction represents the amount of assessment that was deducted from a paid claim. Members may have an assessment calculated but may never have a claim with a deduction utilizing that assessment. The Office of MaineCare Services (OMS) is responsible for applying assessments to submitted claims prior to payment. The Office of the State Auditor (OSA) tested a sample of 60 COC assessments and related deductions from paid claims. Two exceptions for COC assessments that were not adjusted correctly after notification of a change in income or expense were identified as follows: ? One COC was calculated correctly but had an incorrect end date. The COC should have ended on June 30, 2022, but was programmed to end on July 31, 2022. This error did not affect any claims in fiscal year 2022. ? One COC was lower than it should have been by $12. The assessment was $1,079 and should have been $1,091 for six months during the fiscal year. This member had six claims where the incorrect COC was applied. For both exceptions, the COC assessment was calculated correctly by ACES based on the data that was entered into the system; however, that data was entered incorrectly. OSA selected a non-statistical random sample. OSA issued two other related findings: 2022-082, Internal control over the eligibility determination process needs improvement; and 2022-083, improvement. over needs Context: In fiscal year 2022, approximately: ? 26,000 COC assessments were calculated by OFI; ? 9,500 members had COC assessments; and ? $495 million was paid to nursing facilities and residential care facilities. Cause: Lack of supervisory oversight Effect: ? Inaccurate COC assessments and retroactive changes may result in overpayments or underpayments for members or the State. ? Potential questioned costs and disallowances Recommendation: We recommend that the Department implement oversight procedures to ensure that data entered into ACES is accurate and can be relied upon for COC assessment calculations. This will ensure that MaineCare recipients are not overcharged or undercharged for their required contribution towards care in long-term care facilities. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with the two exceptions found by the Office of the State Auditor. However, we believe that the Department has reasonable assurance with the controls in place that results in a 97% compliance rate with the COC calculations, which is a 2% increase from last year. In the prior year?s finding the Department committed to continuing to achieve a 95% compliance rate and CMS agreed with the Department and closed the prior finding. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-1106-08)
(2022-086) Title: Internal control over deceased client cases and claims analysis needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Allowable costs/costs principles Eligibility Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be necessary and reasonable for the performance of the Federal award. Condition: The Office for Family Independence (OFI) is responsible for maintaining complete and accurate client information in the Automated Client Eligibility System (ACES). Information entered into ACES is relied upon by the Office of MaineCare Services (OMS) to approve, deny, process, and analyze claims. OFI relies on numerous data sources for identifying and providing client date of death (DOD) information for input into ACES. In some cases where the exact DOD may not be immediately available, the DOD is entered as the last day of the month so that OFI can close the case of a known deceased client in a timely manner. OFI performs monthly crosswalks to compare the DOD entered in ACES to the reported DOD obtained from the Maine Center for Disease Control & Prevention (MeCDC) vital records. OMS has established procedures to identify claims paid with a service date after DOD. These procedures include staff review of claims and identification of appropriate action for any claim that was improperly paid, as certain claims with service dates after death are allowable. With regards to OMS claims identification procedures, OSA analyzed all claims paid for a client with a DOD in fiscal year 2022 and identified 110 claims paid on behalf of 75 clients that had service dates after death but were not identified by OMS procedures. Claims paid on behalf of these clients after DOD totaled $9,988 in fiscal year 2022. With regards to OFI eligibility procedures, OSA tested a sample of 60 clients with DOD in fiscal year 2022 and identified: ? four clients with a DOD in ACES that did not correspond to the actual DOD provided by MeCDC vital records; and ? one client with no DOD recorded in ACES. OSA selected a non-statistical random sample. Audit procedures also identified that: ? three clients for whom claims were paid after DOD had no DOD recorded in ACES; and ? 13 clients with an incorrect DOD identified by OSA during the fiscal year 2021 audit were still not corrected in ACES. Context: The Medicaid program processed $2.2 billion in paid claims in fiscal year 2022. Cause: ? Lack of adequate procedures to ensure DOD information is entered accurately and appropriately updated in ACES ? Lack of adequate procedures to ensure all claims paid after a client?s DOD are identified Effect: ? Claims paid on behalf of deceased clients may go undetected. ? Potential questioned costs and disallowances Recommendation: We recommend that OFI enhance existing procedures to identify and correct DOD information when a known DOD is not initially provided. We further recommend that OFI implement oversight to ensure DOD information is accurately entered into ACES. We recommend that OMS enhance existing procedures to ensure that all claims with service dates after a client?s DOD are identified for review to detect any claims that are not allowable. Corrective Action Plan: See F-31 Management?s Response: The Department partially agrees with this finding. OFI acknowledges a data mismatch of five clients. Edits were made to the standard operating procedures governing the date of death procedures in November of 2021 including articulation of responsible parties and expected timelines for processing. Additionally, OFI continues to process weekly IEVS discrepancy reports based on death data from our federal partners as well as conduct monthly crosswalks with Maine?s CDC Office of Vital Statistics. OMS worked with OSA to review the original population of over 600 claims that were made after a client?s DOD. The original claims identified by OSA were reduced to 110. OMS did not have sufficient time to perform a more detailed analysis into the underlying reasons that these 110 claims were made to clients after DOD. OMS will complete the in-depth review and then consider if additional updates to procedures are necessary. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: OFI indicates they have enhanced their procedures as of November 2021, implying these will prevent the types of errors identified in the finding. However, of the three clients for whom no DOD was entered into ACES, two occurred after OFI?s November 2021 standard operating procedures update. Though OSA initially identified approximately 600 claims paid after a client?s DOD that were not identified through OMS? procedures, OMS was able to provide additional documentation to remove approximately 500 claims from OSA?s list of exceptions. For the remaining 110 claims, OMS could not provide documentation to support that these claims were identified through OMS? procedures. The finding remains as stated. (State Number: 22-1106-11)
(2022-087) Title: Internal control over the outsourced medical claims coding process needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster (COVID-19) Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: 2105ME5MAP, 2205ME5MAP Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Social Security Act Section 1903(r); National Correct Coding Initiative (NCCI) Medicaid Policy Manual; NCCI Medicaid Technical Guidance Manual The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. State Medicaid Agencies (SMAs) are required to incorporate National Correct Coding Initiative (NCCI) methodologies into State Medicaid programs. States are required to completely and correctly implement six Medicaid NCCI methodologies to ensure that only proper payment of allowable procedures is reimbursed, including the use of specific edit files. Condition: The NCCI was established by the Centers for Medicare and Medicaid Services (CMS) in an effort to promote correct coding by preventing coding errors and code manipulation, and reducing improper payments and improper payment rates. The CMS NCCI Policy Manual states that SMAs must download specific confidential NCCI edit files available on the secure portal, known as MII RISSNET, rather than using publicly available files. SMAs must ensure that they, or their vendors, are using the appropriate Medicaid NCCI edits to adjudicate Medicaid claims. The Office of MaineCare Services (OMS) contracts with a vendor to process medical claims. The vendor updates the claims processing system to incorporate the NCCI edit files; however, the vendor is not obtaining and applying the specific confidential files from MII RISSNET as required by CMS. Context: OMS processed $1.9 billion in Federal medical claims in fiscal year 2022. Cause: OMS determined that the benefit of utilizing the correct coding files did not support the time and expense required to implement the change. Effect: ? Incorrect coding could result in payment of unallowable claims or denial of allowable claims. ? Potential questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that OMS devote the necessary resources to facilitate claims processing using the MII RISSNET files as required by CMS. Corrective Action Plan: See F-31 Management?s Response: The Department agrees with this finding. The State of Maine is now obtaining and forwarding the RISSNET files to Gainwell. The files for Calendar Year Q4 2022 and Calendar Year Q1 2023 were forwarded prior to the start of Q4 2022 and Q1 2023. Gainwell has provided the files to the vendor, Context, for formatting. Neither file was properly validated or applied. The state will work with Gainwell to ensure the previous files are corrected and to ensure current and future files are processed correctly. Contact: Michelle Probert, Director, Office of MaineCare Services, DHHS, 207-287-2093 (State Number: 22-1106-05)
(2022-088) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-31 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-01)
(2022-089) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Significant deficiency Corrective Action Plan: See F-32 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0904-02)
(2022-090) Title: Internal control over DG ? PA program cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as is administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Maine Emergency Management Agency (MEMA) did not minimize the time between drawdown and disbursement of Federal funds. In the Office of the State Auditor?s (OSA) testing of 21 drawdowns: ? the cash balance was not taken into consideration when requesting any of the Federal drawdowns; and ? 11 of the disbursements for program costs ranged from 8 to 45 days after the Federal funds were received. OSA selected a judgmental and a non-statistical random sample. Context: During fiscal year 2022, MEMA expended $80.2 million in Disaster Grants ? Public Assistance (DG ? PA) grant funds. Cause: ? Lack of adequate policies and procedures ? Lack of staff resources available to process grant drawdowns, monitor cash balances, and process payments to subrecipients due to the increased number of COVID-19 grants managed by the agency Effect: ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. ? Noncompliance with Federal and State regulations Recommendation: We recommend that the Department develop and implement policies and procedures to ensure that Federal cash is requested based on immediate cash needs which includes consideration of existing cash balances. We also recommend the Department review its staffing needs to ensure there are adequate resources to process and provide supervisory oversight over the increased workload from COVID-19 grants. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. In State Fiscal Year 2023 MEMA started utilizing the Security and Employment Service Center to draw funds and to ensure the drawdown procedure addresses the need to (1) consider previous cash balances before making a drawdown and (2) ensure the period from drawdown to disbursement does not exceed seven days. The new procedure will provide for limited review and testing by MEMA as appropriate. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-02)
(2022-091) Title: Internal control over DG ? PA program special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Disaster Grants ? Public Assistance (DG ? PA) program in the FFATA reporting system for fiscal year 2022. Context: First-tier subawards totaled $56 million under the DG ? PA program in fiscal year 2022. First-tier subawards account for approximately 70 percent of the program?s expenditures. Cause: ? Competing priorities related to an increase in aid requests as a result of COVID-19 ? Lack of resources Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the DG ? PA program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that MEMA allocate resources to fully implement newly established procedures to ensure that subrecipient awards are properly reported as required by Federal program regulations. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. MEMA will ensure FY23 subawards are entered into the FFATA reporting system. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-04)
(2022-092) Title: Internal control over the submission and review of DG ? PA Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Maine Emergency Management Agency Office of the State Controller Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; 2 CFR 200, Appendix XI, Assistance Listing Number 97.036; OMB M-20-26 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID- 19 Emergency Acts expenditures on the SEFA. Therefore, non-federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID- 19 expenditures on the SEFA on a separate line by Assistance Listing number with ?COVID-19? as a prefix to the program name. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Disaster Grants ? Public Assistance (DG ? PA) program, which had both COVID-19 expenditures and non-COVID-19 expenditures during the fiscal year. At the close of the fiscal year, the Department provided a summary of Federal DG ? PA expenditures to OSC; however, the summary did not specifically identify COVID-19 related expenditures under this program. This summary was then used by OSC to compile and prepare the SEFA. Upon preparation, COVID-19 related expenditures were not identified as such in the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, DG ? PA COVID-19 related expenditures were not identified on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: During fiscal year 2022, DG ? PA program expenditures totaled $80.2 million. Of that amount, $79.5 million were COVID-19 related expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-32 Management?s Response: MEMA Response: The Department agrees with this finding. MEMA will implement controls to ensure the accuracy of Assistance Listing Numbers before SEFA data is submitted to OSC. MEMA Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-064, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1502-01)
(2022-090) Title: Internal control over DG ? PA program cash management needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Cash management Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally funded activities. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as is administratively feasible to the Department?s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than seven business days. Condition: The Maine Emergency Management Agency (MEMA) did not minimize the time between drawdown and disbursement of Federal funds. In the Office of the State Auditor?s (OSA) testing of 21 drawdowns: ? the cash balance was not taken into consideration when requesting any of the Federal drawdowns; and ? 11 of the disbursements for program costs ranged from 8 to 45 days after the Federal funds were received. OSA selected a judgmental and a non-statistical random sample. Context: During fiscal year 2022, MEMA expended $80.2 million in Disaster Grants ? Public Assistance (DG ? PA) grant funds. Cause: ? Lack of adequate policies and procedures ? Lack of staff resources available to process grant drawdowns, monitor cash balances, and process payments to subrecipients due to the increased number of COVID-19 grants managed by the agency Effect: ? The Federal government may impose more stringent program-specific cash management requirements based on noncompliance. ? Noncompliance with Federal and State regulations Recommendation: We recommend that the Department develop and implement policies and procedures to ensure that Federal cash is requested based on immediate cash needs which includes consideration of existing cash balances. We also recommend the Department review its staffing needs to ensure there are adequate resources to process and provide supervisory oversight over the increased workload from COVID-19 grants. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. In State Fiscal Year 2023 MEMA started utilizing the Security and Employment Service Center to draw funds and to ensure the drawdown procedure addresses the need to (1) consider previous cash balances before making a drawdown and (2) ensure the period from drawdown to disbursement does not exceed seven days. The new procedure will provide for limited review and testing by MEMA as appropriate. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-02)
(2022-091) Title: Internal control over DG ? PA program special reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into the FFATA Subaward Reporting System. The Department did not report any of its first-tier subawards under the Disaster Grants ? Public Assistance (DG ? PA) program in the FFATA reporting system for fiscal year 2022. Context: First-tier subawards totaled $56 million under the DG ? PA program in fiscal year 2022. First-tier subawards account for approximately 70 percent of the program?s expenditures. Cause: ? Competing priorities related to an increase in aid requests as a result of COVID-19 ? Lack of resources Effect: ? Noncompliance with Federal regulations ? First-tier subaward information for the DG ? PA program was not reported to the Federal government. This information may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that MEMA allocate resources to fully implement newly established procedures to ensure that subrecipient awards are properly reported as required by Federal program regulations. Corrective Action Plan: See F-32 Management?s Response: The Department agrees with this finding. MEMA will ensure FY23 subawards are entered into the FFATA reporting system. Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 (State Number: 22-1502-04)
(2022-092) Title: Internal control over the submission and review of DG ? PA Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management Administrative and Financial Services State Bureau: Maine Emergency Management Agency Office of the State Controller Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: 4354DRMEP00000001, 4367DRMEP00000001, 4522DRMEP00000001 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; 2 CFR 200, Appendix XI, Assistance Listing Number 97.036; OMB M-20-26 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. To maximize the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26 (June 18, 2020) instructed recipients and subrecipients to separately identify the COVID- 19 Emergency Acts expenditures on the SEFA. Therefore, non-federal entities should separately identify COVID-19 expenditures on the SEFA. For existing programs that have both COVID-19 expenditures and non-COVID-19 expenditures, this may be accomplished by identifying COVID- 19 expenditures on the SEFA on a separate line by Assistance Listing number with ?COVID-19? as a prefix to the program name. Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for the Disaster Grants ? Public Assistance (DG ? PA) program, which had both COVID-19 expenditures and non-COVID-19 expenditures during the fiscal year. At the close of the fiscal year, the Department provided a summary of Federal DG ? PA expenditures to OSC; however, the summary did not specifically identify COVID-19 related expenditures under this program. This summary was then used by OSC to compile and prepare the SEFA. Upon preparation, COVID-19 related expenditures were not identified as such in the SEFA. Subsequent OSC review procedures were not designed to detect and correct this error. As a result, DG ? PA COVID-19 related expenditures were not identified on the State?s fiscal year 2022 SEFA when provided to the Office of the State Auditor for audit purposes. Context: During fiscal year 2022, DG ? PA program expenditures totaled $80.2 million. Of that amount, $79.5 million were COVID-19 related expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA. Corrective Action Plan: See F-32 Management?s Response: MEMA Response: The Department agrees with this finding. MEMA will implement controls to ensure the accuracy of Assistance Listing Numbers before SEFA data is submitted to OSC. MEMA Contact: Joe Legee, Deputy Director, MEMA, DVEM, 207-624-4400 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-023, 2022-053, and 2022-064, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1502-01)
(2022-093) Title: Internal control over expenditure processing needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Homeland Security Grant Program Emergency Management Performance Grant Assistance Listing Number: 97.067; 97.042 Federal Award Identification Number: EMW2018SS00049S01; EMB2019EP00004 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $59,759 under ALN 97.067, Homeland Security Grant Program Likely Questioned Costs: Likely questioned costs cannot be determined due to the variety of expenditures within the population. The projection of questioned costs utilizing the error rate related to the known exception and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Security and Employment Service Center is responsible for processing invoices for multiple State agencies. The Office of the State Auditor (OSA) tested a sample of 60 Federal expenditure transactions to ensure that the expenditure was accurately recorded. OSA found that one quarterly lease payment totaling $59,759 was processed incorrectly. The coding on the invoice indicated that the expenditure should be split coded utilizing Federal and State funds, and that the Federal share should be paid utilizing funds from the Emergency Management Performance Grant. Instead, Homeland Security Grant Program funds were erroneously charged. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department reported expenditures of $2.6 million for the Emergency Management Performance Grant and $4.7 million for the Homeland Security Grant Program. Cause: Lack of supervisory oversight Effect: ? Questioned costs and potential disallowances ? Inaccurate reporting of expenditures Recommendation: We recommend that the Department improve oversight procedures to ensure staff are properly recording expenditures in the correct accounts with the proper utilization of grant funds. Corrective Action Plan: See F-33 Management?s Response: The Department agrees with this finding. The Security and Employment Service Center will continue to provide training for data entry and invoice approval processes. Contact: Marilyn Leimbach, Director, Service and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 22-1000-01
(2022-093) Title: Internal control over expenditure processing needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Homeland Security Grant Program Emergency Management Performance Grant Assistance Listing Number: 97.067; 97.042 Federal Award Identification Number: EMW2018SS00049S01; EMB2019EP00004 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $59,759 under ALN 97.067, Homeland Security Grant Program Likely Questioned Costs: Likely questioned costs cannot be determined due to the variety of expenditures within the population. The projection of questioned costs utilizing the error rate related to the known exception and amounts tested would not produce a reasonable estimate of likely questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: The Security and Employment Service Center is responsible for processing invoices for multiple State agencies. The Office of the State Auditor (OSA) tested a sample of 60 Federal expenditure transactions to ensure that the expenditure was accurately recorded. OSA found that one quarterly lease payment totaling $59,759 was processed incorrectly. The coding on the invoice indicated that the expenditure should be split coded utilizing Federal and State funds, and that the Federal share should be paid utilizing funds from the Emergency Management Performance Grant. Instead, Homeland Security Grant Program funds were erroneously charged. OSA selected a non-statistical random sample. Context: In fiscal year 2022, the Department reported expenditures of $2.6 million for the Emergency Management Performance Grant and $4.7 million for the Homeland Security Grant Program. Cause: Lack of supervisory oversight Effect: ? Questioned costs and potential disallowances ? Inaccurate reporting of expenditures Recommendation: We recommend that the Department improve oversight procedures to ensure staff are properly recording expenditures in the correct accounts with the proper utilization of grant funds. Corrective Action Plan: See F-33 Management?s Response: The Department agrees with this finding. The Security and Employment Service Center will continue to provide training for data entry and invoice approval processes. Contact: Marilyn Leimbach, Director, Service and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 22-1000-01
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)
(2022-022) Title: Internal control over P-EBT Food Benefits needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.542 Federal Award Identification Number: P-EBT Benefits, Maine Compliance Area: Activities allowed or unallowed Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: $61,507,558 Likely Questioned Costs: $61,507,558. The full amount of P-EBT Food Benefits issued during fiscal year 2022 are reported as known questioned costs. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.5; Families First Coronavirus Response Act (FFCRA) (Public Law 116-127), Section 1101; State Plan for Pandemic EBT: Children in School, School Year 2020-2021; State Plan for Pandemic EBT: Children in School and Child Care, Summer 2021; State Plan for Pandemic EBT: Children in School/Child Care 2021-2022 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State?s financial management systems, including records documenting compliance with the terms and conditions of the Federal award, must be sufficient to determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The State is required to maintain Electronic Benefit Transfer (EBT) issuance, inventory, reconciliation, and other accountability records for a period of three years. The State agency shall control all issuance documents which establish household eligibility while the documents are transferred and processed within the State. The State agency shall use numbers, batching, inventory control logs, or similar controls from the point of initial receipt through the issuance and reconciliation process. The Department must carry out the Pandemic EBT (P-EBT) program, authorized by the FFCRA, in accordance with their State agency plan approved by the U.S. Department of Agriculture (USDA). The State was required to submit plans to the USDA as a precondition for participation in the P-EBT Food Benefits program. The plans outline the proposed framework for operating the program including details on how benefits will be issued, estimates for the total amount of P-EBT benefits and the number of children participating, tentative issuance schedules, and how the State will identify eligible school children and children in child care. Three separate plans were approved by the USDA for P-EBT benefit issuances during fiscal year 2022: School Year 2020- 2021, Summer 2021, and School Year 2021-2022. Condition: The FFCRA authorized the establishment of the P-EBT Food Benefits program in response to the COVID-19 public health emergency. The P-EBT program is administered by the Office for Family Independence (OFI) and provides nutrition assistance for school-age children who would have received free or reduced-price school meals under the National School Lunch Program and School Breakfast Program, and children in child care whose child-care facility was closed or had reduced attendance/hours due to the COVID-19 public health emergency. As outlined in the State?s USDA-approved plans, OFI established an agreement with the Maine Department of Education (MDOE) to provide information required for issuance of P-EBT benefits to eligible children. MDOE provided data on children participating in the Free and Reduced School Lunch Program as the starting point for eligibility determinations under the P-EBT program. OFI utilized this information to apply additional eligibility criteria and build issuance files for P-EBT benefit processing. The agreement between OFI and MDOE established OFI as the responsible party for the maintenance of data used for determining client eligibility and distributing benefits. Federal guidance over the P-EBT program outlines that audit procedures provide assurance that the Department has established and implemented processes to properly determine program eligibility and benefit levels. This includes testing a sample of clients who were issued P-EBT benefits during the fiscal year to verify consistency with the State?s USDA-approved plans and compliance with Federal program requirements. The Office of the State Auditor (OSA) requested original data files containing client and benefit issuance information utilized by OFI during the fiscal year for all P-EBT issuances that occurred. OFI could not provide OSA with these files. Without a population of the original client and benefit information transmitted for P-EBT issuance, OSA is unable to verify compliance with Federal program eligibility and allowability requirements. As a result, all P-EBT benefits issued during fiscal year 2022 totaling $61,507,558 are considered questioned costs. Context: In fiscal year 2022, the State provided approximately 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of supervisory oversight ? Lack of adequate procedures Effect: ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department establish procedures to ensure that documentation in support of P-EBT eligibility determinations and allowability of resulting benefit issuances can be provided to corroborate Federal award program expenditures and demonstrate compliance with Federal regulations. Corrective Action Plan: See F-11 Management?s Response: The Department disagrees with this finding. The Department provided the Office of the State Auditor (OSA) with all material used to determine P-EBT benefits. While we acknowledge that due to restrictions imposed on us through a Memorandum of Understanding we have with Maine?s Department of Education (MDOE), which called for the destruction of MDOE's original records, we did provide OSA with the modified records used to determine eligibility benefits. This modification (such as removal of duplicates and address correction) was necessary for ingestion of these records into our Automated Client Eligibility System (ACES), the files were based on an exact replica of MDOE's original data files. These files, the output (client payments) and supporting information necessary for OSA to conduct testing and verify compliance with federal program requirements has been and continues to be available. We believe that the costs are allowable and supported by adequate documentation as required by the Uniform Guidance. Without performing audit testing on the population of payments in question, there is no basis for questioning compliance with eligibility requirements for this population and no basis for questioned costs. It should not be assumed that the entire population is considered ineligible without actually performing audit testing. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: The Department has not provided OSA with all requested documentation used to determine P-EBT benefits as outlined below: 1. Files received from MDOE were not provided: The files containing raw student data provided to OFI from MDOE were destroyed after transfer. OFI contends that this was done in accordance with the MOU in place between OFI and MDOE; however, the MOU further states that OFI should maintain the data used for determining client eligibility and distribution of benefits. In addition, while MDOE could recreate the student data, the files would not be adequate because benefit allotments and client identification information applied by OFI prior to P-EBT benefit issuance would not be included. Auditor's Concluding Remarks are continued on the following page. 2. Modified files based on MDOE data were provided: As noted in Management?s Response, modifications were made to MDOE raw student data files so that the files could be imported into OFI?s database. These modified files were used by OFI to generate benefit issuance files; however, the files contained student data from MDOE but did not provide client identification information or benefit allotment applied to each client. While OFI asserts that the files are based on an exact replica of MDOE?s original data files, OSA is unable to verify that the data presented in the modified files is an exact replica, that the data is accurate, or that all P-EBT eligible clients are included in the modified files. 3. Benefit Issuance files were not provided: OFI could not provide these files to OSA as they were not maintained in accordance with Federal regulations. Issuance files represent the information provided for the establishment and processing of benefits and contain the P- EBT benefit amounts allotted and related eligibility criteria used to issue Federal benefits to each child/client during the fiscal year. These benefit issuance files would have provided OSA an accurate population in order to test Federal compliance requirements for P-EBT eligibility and resulting benefit payment allowability. 4. Paid Benefit files were provided: OFI provided OSA with files containing information on paid benefit issuances during fiscal year 2022, referenced as the output (client payments) files in Management?s Response. While the data fields may be similar to the benefit issuance files used to process eligible clients and related benefit allotments, OSA does not have assurance that the output (client payments) file is accurate, complete, and aligns with the intended P-EBT recipients as established by the benefit issuance files. OFI did not provide OSA with all material used to determine P-EBT benefits. As outlined above, OFI provided modified records rather than original records because OFI did not maintain original issuance files utilized to provide client P-EBT benefits. Federal requirement 7 CFR 274.5 requires that States maintain issuance records for a period of three years. OFI failed to do so, resulting in noncompliance with Federal regulations. Because of OFI?s failure to provide issuance files, OSA was unable to test compliance with P-EBT eligibility and allowability. In accordance with 2 CFR 200.403, costs must be adequately documented. OFI could not provide documentation to support compliance with the terms and conditions of the Federal award to determine that such funds have been used in accordance with Federal program regulations. Therefore, OSA questions all costs for the program. The finding remains as stated. (State Number: 22-1108-05)
(2022-023) Title: Internal control over the submission and review of SNAP and P-EBT Schedule of Expenditures of Federal Awards information needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office for Family Independence Office of the State Controller Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State?s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN). Condition: The Department must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State?s SEFA. OSC is responsible for compiling this information on behalf of the State. In fiscal year 2022, the Department received funding for Supplemental Nutrition Assistance Program (SNAP) benefits under ALN 10.551. In addition, the Department received funding for Pandemic EBT Food Benefits (P-EBT) under ALN 10.542. At the close of the fiscal year, the Department and its Service Center provided a summary of Federal expenditures to OSC that included SNAP Cluster and P-EBT expenditures; however, the summary did not specifically identify P-EBT expenditures separately as funding under ALN 10.542. This summary was then used by OSC to compile and prepare the SEFA and the related Notes to the SEFA. Upon preparation, P-EBT expenditures were erroneously reported as SNAP expenditures under ALN 10.551 in the SEFA and in the related Note 5 to the SEFA which outlines Noncash Awards. Subsequent OSC review procedures were not designed to detect and correct these errors. As a result, P-EBT expenditures were omitted from the State?s fiscal year 2022 SEFA and related Notes when provided to the Office of the State Auditor for audit purposes. Context: For fiscal year 2022, P-EBT expenditures totaling $61.5 million were incorrectly reported on the SEFA and in the Notes to the SEFA, resulting in the omission of a Federal program and the overstatement of SNAP benefit expenditures. Cause: ? Lack of adequate internal control relating to Department SEFA submissions to OSC ? Lack of adequate review procedures by OSC Effect: Incomplete or inaccurate amounts by Federal program and ALN on the SEFA would result in noncompliance with Federal regulations if undetected. The SEFA is submitted to the Federal government and may be used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department and its Service Center implement additional procedures to improve preparation and submission of SEFA information to OSC. We further recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. These control procedures will ensure that expenditures are reported accurately on the SEFA and in the related Notes to the SEFA. Corrective Action Plan: See F-12 Management?s Response: DHHS and DHHS Financial Service Center Response: The DHHS and DHHS Financial Service Center agree with this finding. For the next SEFA for SFY 2023, the OFI will report SNAP and P- EBT Benefit expenditures for the associated ALN to the Service Center. The OFI will report any new ALN, as documented in the April 2022 Coronavirus State and Local fiscal Recovery Funds, Department of the Treasury Assistance Listing Recovery Funds, as verified by SNAP, and associated expenses to the Service Center, if applicable. The Financial Service Center will then provide a summary and backup of what is being reported on the SEFA to OFI for their written approval. The Financial Service Center will add to the reviewer?s checklist that the preparer has consulted and has proper backup with the OFI to verify that the benefits are reported under the correct ALN. This will be completed by December 31, 2023. DHHS Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 OSC Response: The Office of the State Controller partially agrees with this finding. Federal funds reporting is decentralized and agencies use different methods for tying amounts to specific federal programs in Advantage. The Management Representation letters received from the agencies acknowledge that the agencies are responsible for the fair presentation of the expenditures in conformity with and in compliance with the rules and regulations of 2 CFR ?200. OSC is responsible to compile the data and submit the SEFA. OSC will update or clarify guidance as necessary and will consult with service center and agency financial personnel to help ensure their compilation/review systems are designed to provide accurate information for the SEFA. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 Auditor?s Concluding Remarks: In reply to OSC?s Management Response, the Office of the State Auditor (OSA) recognizes that SEFA reporting is a decentralized process and that OSC receives Management Representation Letters from agencies acknowledging responsibility for the fair presentation of SEFA information; however, OSC is responsible for reviewing the SEFA before it is provided to OSA for audit purposes. OSC has established review procedures prior to submission to OSA and that review and approval is documented on agencies? submissions. This review process, as stated in the finding, was not designed to detect and correct the errors noted in this finding, and findings 2022-053, 2022-064, and 2022-092, which are all related to agency submissions and OSC review of SEFA information. In addition, the Department of Administrative and Financial Services and OSC provide a signed Engagement Letter and Management Representation Letter to OSA, acknowledging the following responsibilities related to the annual Single Audit: ? Understanding and complying with the requirements of 2 CFR 200, including requirements relating to preparation of the SEFA ? Preparing and fairly presenting the SEFA and related disclosures in accordance with the requirements of the Uniform Guidance, including full identification of all government programs and related activities subject to the Federal compliance audit and all SEFA expenditures made during the audit period for all awards provided by Federal agencies OSA asserts that a year-to-year SEFA comparison would have detected the errors identified in the aforementioned findings; therefore, we continue to recommend that OSC implement additional supervisory review procedures over the SEFA information compiled on behalf of the State. This will provide assurance relating to the responsibility for SEFA information as outlined above and attested to OSA at the commencement and conclusion of the annual Single Audit. The finding remains as stated. (State Number: 22-1108-01)
(2022-024) Confidential finding, see below for more information Title: over , and , and needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: None Type of Finding: Material weakness Corrective Action Plan: See F-12 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-05)
(2022-029) Confidential finding, see below for more information Title: over the needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-13 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-02)
(2022-083) Confidential finding, see below for more information Title: over needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Material weakness Corrective Action Plan: See F-30 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-04)
(2022-027) Title: Internal control over EBT reconciliation procedures needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster (COVID-19) Pandemic EBT Food Benefits (P-EBT) (COVID-19) Assistance Listing Number: 10.551, 10.561; 10.542 Federal Award Identification Number: SNAP Benefits, Maine; P-EBT Benefits, Maine Compliance Area: Allowable costs/cost principles Special tests and provisions Type of Finding: Significant deficiency Questioned costs Known Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Likely Questioned Costs: $80,555 under ALN 10.542, P-EBT Food Benefits Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 274.4 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. The Department shall account for all Electronic Benefit Transfer (EBT) issuances through a reconciliation of total funds entered into, exiting from, and remaining in the EBT system each day. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The Pandemic EBT (P-EBT) Food Benefits program provides temporary emergency nutrition benefits to eligible school children. Both programs utilize EBT cards as the mechanism to provide benefits. Benefit information is transmitted by the Department to the Electronic Payment Processing and Information Control (EPPIC) system for processing. As EBT purchases are made by SNAP and P-EBT clients, EPPIC automatically draws Federal funds using the Automated Standard Application for Payments (ASAP) system in order to pay retailers. The Department is required by Federal program regulations to reconcile EBT activity between the systems every day. The Department did not perform daily reconciliations from July 2021 through April 2022. The Department retrospectively performed these daily reconciliations in April 2022. This retrospective reconciliation process identified an error in July 2021 SNAP benefit issuances. Benefits totaling $80,555 were incorrectly issued out of the Federal P-EBT Food Benefits program instead of the Federal/State SNAP program due to an EPPIC processing error. The error has not been corrected as of February 2023. Context: In fiscal year 2022, the State provided approximately: ? 119,000 SNAP clients with $466 million in Federal benefits, and ? 115,000 P-EBT clients with $61.5 million in Federal benefits. Cause: ? Lack of adequate policies and procedures ? Lack of supervisory oversight to ensure required reconciliations are completed ? The staff member responsible for performing this Federal requirement did not have access to the ASAP system for nine months of the fiscal year, which is needed to perform the daily reconciliation. Access to the ASAP system was granted in April 2022. Effect: ? SNAP program expenditures are understated and P-EBT Food Benefits program expenditures are overstated by $80,555 as reported to the Federal government. ? Known questioned costs ? Potential future questioned costs and disallowances ? Noncompliance with Federal regulations Recommendation: We recommend that the Department maintain policies and procedures to ensure compliance with Federal program regulations and that require: ? completion of EBT reconciliations on a daily basis, and ? timely correction of issuance errors. Corrective Action Plan: See F-13 Management?s Response: The Department partially agrees with this finding. The Department agrees that reconciliations were not completed as required until April of 2022, but that they were done retrospectively. The Department disagrees that there are questioned costs in the amount of $80,555. This debt was not caused by a failure to perform reconciliations. Rather, it was discovered by the retroactive reconciliations performed by the Department. Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 Auditor?s Concluding Remarks: In accordance with 7 CFR 274.4, the Department is required to perform daily reconciliations of the EBT system. The Department?s failure to perform these daily reconciliations resulted in noncompliance with Federal regulations. Furthermore, if the daily reconciliations had been performed as required, the issuance error would have been detected and corrected in a timely manner, preventing reoccurrence throughout the month of July 2021. In accordance with 2 CFR 200.403, for a cost to be allowable under a Federal award, the costs must be reasonable and necessary for the performance of the Federal award. Issuing benefits out of the wrong Federal program is not a necessary cost for the performance of the Federal award; therefore, the Office of the State Auditor questions the allowability of these costs. The finding remains as stated. (State Number: 22-1108-03)
(2022-019) Title: Internal control over financial reporting of OFI overpayments needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services (DAFS) Health and Human Services (DHHS) State Bureau: Office of the State Controller, a Unit of DAFS Health and Human Services Service Center, a Unit of DAFS Office for Family Independence, a Unit of DHHS Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster (COVID-19) Temporary Assistance for Needy Families (TANF) (COVID-19) Assistance Listing Number: 10.551, 10.561; 93.558 Federal Award Identification Number: SNAP Benefits, Maine; 1901METANF, 2001METANF, 2101METANF Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; 5 MRSA 1547 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. Accounting and reporting activities of the State of Maine are required by statute to be in conformance with U.S. Generally Accepted Accounting Principles (GAAP). Condition: The Office for Family Independence (OFI) tracks improper payments made to, or on behalf of, clients in a subsidiary ledger. These payments are for services provided to Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) clients. OFI provides the fiscal year-end subsidiary ledger to the Office of the State Controller (OSC) for financial reporting. For the fiscal year ending June 30, 2022, improper payments in OFI?s subsidiary ledger totaled $27.8 million in Federal and State dollars dating back to 1978. OFI does not have a claim termination policy in place to ensure that these improper payments are properly recovered or terminated. Additionally, OSC properly discloses the contingent liability in Note 18 of the State?s financial statements; however, OSC has also recorded a liability due to the Federal government on the financial statements for the amount deemed collectible. The Office of the State Auditor proposed an adjustment to remove the recorded liability as the entire amount due to the Federal government is contingent upon recovery. The proposed adjustment was not recorded by OSC. Context: Of the $27.8 million receivable balance, $22 million, or 80 percent, was established over 5 years ago; $16.3 million, or 60 percent, was established more than 10 years ago; and $7.9 million, or 28 percent, was established more than 20 years ago. Receivables totaled $27.8 million as of June 30, 2022, reduced by the estimated allowance for uncollectible accounts of $23.1 million. The allowance represents 83 percent of the total balance and results in management?s presentation of $4.4 million in net receivables. Cause: ? OFI does not have an established claim termination policy to write off, or terminate, non-recovery of improper payments. ? OSC did not consistently apply procedures for reporting contingent liabilities. Effect: ? The accounts receivable balance and the related allowance for uncollectible accounts are overstated in Note 6 of the financial statements. ? The amount due to the Federal government is overstated and deferred inflows are understated by $4.4 million in the State?s financial statements. Recommendation: We recommend that the Department establish a claim termination policy in accordance with Federal program regulations to ensure that receivable balances are not misstated on the State?s financial statements and that collection efforts are made in a timely manner. We further recommend that OSC implement procedures to ensure that financial reporting of contingent liabilities is consistent in the State?s financial statements. Corrective Action Plan: See F-10 Management?s Response: The Department of Health and Human Services and the Office of the State Controller agree that the variance between the receivable and reserve should be booked as a deferred inflow. A claim termination policy will be established in accordance with federal regulations. OSC Contact: Sandra Royce, Director of Financial Reporting, OSC, 207-626-8451 OFI Contact: Anthony Pelotte, Director, Office for Family Independence, DHHS, 207-624-4104 (State Number: 22-0203-01)
(2022-020) Confidential finding, see below for more information Title: ________ over the ________ needs improvement Pursuant to paragraph 6.63 of the U.S. Government Accountability Office?s Government Auditing Standards (also known as the Yellow Book), we omitted details from this finding as they are confidential under the provisions of 5 MRSA 244-C (3). Though the content of this finding has been redacted, we provided the Department(s) with detailed information regarding the specific condition we identified, as well as the related criteria, context, causes, effects, and our specific recommendations for improvement. Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table Type of Finding: Significant deficiency Corrective Action Plan: See F-11 Contact: Shirley Browne, Deputy State Controller, Office of the State Controller, 207-626-8423 (State Number: 22-0905-01)