CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The State Treasurer's Office did not make subrecipients aware of all required grant award information for the Mineral Leasing Act.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were included in the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
There were 40 awards during the audit period of 7/1/2022 - 6/30/2024. There were 8 awards tested with 8 errors noted. The following criteria were missing:
- (ii) Subrecipient's unique entity identifier;
- (iii) Federal Award Identification Number (FAIN);
- (xiii) Identification of whether the award is R&D; and
- (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414.
- (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimus indirect cost rate.
(ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d).
- (6) Appropriate terms and conditions concerning closeout of the subaward.
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the State Treasurer's Office update its grant award templates to ensure that subrecipients are made award of all required grant award information.
STATE TREASURER’S OFFICE RESPONSE
The Office of the State Treasurer does agree with finding that our grant award template did not make subrecipients aware of all required grant award information for the Mineral Leasing Act as required.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction incorrectly included neglected or delinquent facilities as part of their Title IIA allocation to Local Educational Agencies (LEA). We selected a sample of 17 in 2022-2023 and 17 in 2023-2024. Of the 17 samples in 2022-2023, we identified a 100% error rate. The total known allocation error identified was $60,026. This amount was the total allocated to negligent and delinquent districts. By allocating this amount to the noneligible districts, the eligible school districts were under allocated by the same amount. This was issue was fixed by the department for the 2023-2024 year and no error were found during the testing of 2023-2024.
CRITERIA
The Elementary and Secondary Education Act of 1965 (ESEA Section 2012(a)(1)) states, the State, acting through the State Educational Agency (DPI), shall award subgrants to eligible local educational agencies (LEA).
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulation, and the terms and conditions of the federal award.
The Elementary and Secondary Education Act of 1965 (ESEA Section 8101(30) states "the term local educational agency means a public board of education or other public authority legally constituted within a state for either administrative control or direction of, or to perform a service function for, public elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a state, or for a combination of school districts or counties that is recognized in a state administrative agency for its public elementary school or secondary schools."
The Elementary and Secondary Education Act of 1965 (ESEA Section 1432) defines Institutions for Neglected or Delinquent Children and Youth as "a public or private residential facility, other than a foster home, that is operated for the care of children who have been committed to the institution or voluntarily placed in the institution under applicable State law, due to abandonment, neglect, or death of their parents or guardian; or a public or private residential facility for the care of children who have deemed adjudicated to be delinquent or in need of supervision."
As Neglected and Delinquent Facilities are operated only for the care of old children who have been committed or placed in their institution due to abandonment, neglect, death of their parents or guardians, or in need of supervision, these facilities are not recognized as Local Educational Agency.
CAUSE
The Department of Public Instruction was unaware that neglected and delinquent facilities could not be included in their Title IIA allocation calculation and on subrecipient's grant awards.
EFFECT
The Department of Public Instruction did not comply with the allocation requirements to LEAs for Title IIA grants. The LEAs eligible to receive funding were allocated less than they should have.
CONTEXT
The Department of Public Instruction allocated $9,834,095 in Federal funds to 169 school districts during the 2022-2023 school year and $9,939,938 in Federal funds to 169 school districts during the 2023-2024 school year. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-032 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction ensure the Title IIA allocations are calculated based on the Federal requirements.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
Quarterly Project and Expenditure Reports tested did not accurately report key line items for each project.
CRITERIA
Coronavirus Capital Projects Fund Compliance and Reporting Guidance For States, Territories, and Freely Associated States (published December 2022) indicates that expenditures may be reported on a cash or accrual basis as long as the methodology is disclosed and is consistently applied. Project and Expenditure Reports must incorporate the definition of expenditures pursuant to 2 CFR 200.1. Recipients must maintain accounting records for compiling and reporting accurate financial data in accordance with appropriate accounting standards and principles. The guidance also defines "Obligations" as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. In addition, for Multipurpose Community Facility Projects, recipients are required to report, for each project, current period obligations, cumulative obligations, current period expenditures, and cumulative expenditures; as well as total square footage funded by CPF dollars (planned/actual). Lastly, the guidance allows edits or changes to be reflected in the next available report.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Per GAO Standards for Internal Control in Federal Government, Information and Communication, Principle 13 - Use of Quality Information, Attribute 13.04, management should obtain relevant data from reliable internal and external sources in a timely manner based on the identified information requirements.
CAUSE
Career and Technical Education did not consistently utilize accounting records for compiling Project and Expenditure Report data in accordance with appropriate accounting standards and principles. The tracking spreadsheet used to prepare the reports lacked a consistent basis of accounting for tracking payments since certain dates reflected in the spreadsheet did not agree to the state's accounting system (PeopleSoft) posted dates. Lastly, Career and Technical Education was unaware of the definition of an "obligation" until it was brought up during the Single Audit.
EFFECT
Inaccurate Project and Expenditure Reports limit the Treasury's ability to effectively track and monitor the use of the Coronavirus Capital Projects Fund for approved projects. In addition, inaccurate Project and Expenditures Reports also impacts the accuracy of program reporting for public transparency purposes.
CONTEXT
The Career and Technical Education entered into grant agreements with subrecipients on March 17, 2022, that obligated the initial CPF appropriation of $68,276,228 for multipurpose community facility projects. These grant agreements were subsequently amended in March 2024 to allocate $6,319,473 of CPF initially appropriated for broadband projects.
We tested the Project and Expenditure Reports which covered the periods January 1, 2024, to March 31, 2024, and April 1, 2024, to June 30, 2024. For the covered period January 1, 2024, to March 31, 2024, current period obligations were overstated by $9,272,777, cumulative obligations were understated by $36,987,052, current period expenditures were incorrectly reported for 5 out of 19 projects (in total, current period expenditures were understated by $124,881 using the cash basis) and cumulative expenditures were incorrectly reported for 7 out of 19 projects (in total, cumulative expenditures were overstated by $143,376 using the cash basis). For the covered period April 1, 2024, to June 30, 2024, current period obligations were overstated by $10,308,528, cumulative obligation amounts were corrected based on discussions with the auditor, current period expenditures were incorrectly reported for 8 out of 19 projects (in total, current period expenditures were overstated by $1,639,438 using the cash basis), and cumulative expenditures were incorrectly reported for 9 out of 19 projects (in total, cumulative expenditures were overstated by $2,223,450 using the cash basis or understated by $737,558 using the accrual basis). Lastly, it appeared total square footage reported (planned and actual) included square footage funded by all funding sources and not the square footage funded solely by CPF. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Career and Technical Education establish a consistent methodology for compiling and reporting financial data that is in accordance with appropriate accounting standards and principles. We also recommend the Career and Technical Education comply with Project and Expenditure Report guidance for reporting obligations, expenditures, and total square footage funded by Capital Project Fund dollars, including making any necessary edits and changes in the next available report.
CAREER AND TECHNICAL EDUCATION RESPONSE
The Department agrees with this recommendation
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Career and Technical Education is not verifying every subrecipient is audited and reviewing audit findings as required by 2 CFR 200, Subpart F. Subsequently, by not verifying every subrecipient is audited, Career and Technical Education is not ensuring their responsibilities for issuing management decisions are performed, if any findings are identified in the audits.
CRITERIA
All pass-through entities 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 terms and conditions of the subaward, and that the subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include, in part, following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward; issuing a management decision for applicable audit findings pertaining only to the federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521; and ensuring audit findings specifically related to the subaward are resolved (2 CFR 200.332(d)).
• Verify that every subrecipient is audited as required by 2 CFR 200, Subpart F, when it is expected that the subrecipient's Federal award expended during the respective fiscal year equaled or exceeded the $750,000 threshold set forth in 2 CFR 200.501 (2 CFR 200.332(f).
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
Career and Technical Education has not established processes to identify which subrecipients are subject to required audits or to obtain and review Uniform Guidance Single Audit reports. In addition, Career and Technical Education has not developed a tracking system to ensure timely submission of required audit reports and to ensure timely and appropriate corrective action is taken on all deficiencies.
EFFECT
Subrecipient noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward, including audit findings pertaining to the Federal award, may go undetected and unresolved.
CONTEXT
Career and Technical Education awarded subawards, individually up to $10 million, to 13 subrecipients totaling $74.6 million for 19 different multi-purpose community facility projects. Career and Technical Education has had prior experience with these subrecipients. Projects were included in the state’s program plan that was reviewed and approved by U.S. Treasury. Career and Technical Education imposed specific subaward conditions upon each subrecipient requiring payments as reimbursements rather than advance payments. Career and Technical Education performs ongoing monitoring procedures through review and approval of subrecipient requests for reimbursements, which includes reviewing invoices and contractor progress billings for unallowable expenses, prior to disbursing Capital Project Funds. Lastly, Career and Technical Education conducts annual on-site visits of started projects until completed to visually inspect projects are being completed as planned. Where sampling was performed, the audit used a non-statistical sampling method.
This finding, in combination with the finding regarding required communication of award information to the subrecipients (Finding 2024-04), results in a modified opinion for the subrecipient monitoring compliance requirement.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend Career and Technical Education establish processes to identify which subrecipients are subject to required audits and to obtain and review Uniform Guidance Single Audit reports, including developing a tracking system to ensure timely submission of required audit reports and timely and appropriate corrective action is taken on all deficiencies.
We also recommend Career and Technical Education verify every subrecipient is audited as required by 2 CFR 200, Subpart F; follow-up and ensure that subrecipients take timely and appropriate action on all deficiencies of the Federal award; and issue management decisions and ensure audit findings have been resolved.
CAREER AND TECHNICAL EDUCATION RESPONSE
The Department agrees with this recommendation
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Career and Technical Education did not ensure all required information was provided to subrecipients provided Coronavirus Capital Project Funds CPF). In addition, the pass-through entity's internal controls were insufficient to ensure that subrecipients received communication regarding the necessary items. Required information not communicated included:
• Subrecipient's name did not always match the name associated with its unique entity identifier obtained from SAM.gov;
• Subrecipient's unique entity identifier;
• Federal Award Identification Number;
• Federal Award date;
• Subaward Period of Performance Start and End Date;
• Amounts of the Federal Funds obligated, committed, and in total to the subrecipient by the pass-through entity were not clearly identifiable between Coronavirus Capital Projects Fund and Coronavirus State and Local Fiscal Recovery Funds;
• Assistance Listing Number; and,
• Reference of requirement for auditor access to the subrecipient's records and financial statements.
CRITERIA
Federal regulation, 2 CFR 200.332(a), requires pass-through entities to communicate specific required information to subrecipients.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
Career and Technical Education worked with the Attorney General's Office to develop a standard template for agreements with subrecipients. However, Career and Technical Education did not ensure all required communications applicable to Federal awards were included in the standard template.
EFFECT
These required communications are required to help subrecipients meet all their reporting requirements, and to meet all award terms. Subrecipients subject to Single Audits also need this information for their audits.
CONTEXT
Career and Technical Education awarded Capital Project Fund subawards, individually up to $10 million, to 13 subrecipients totaling $74.6 million for 19 different multi-purpose community facility projects. Four subaward agreements were tested and all did not include the required information identified in the condition of this finding.
In addition, three subrecipients received $6,666,667 for the projects from the State and Local Fiscal Recovery Fund. Career and Technical Education only entered into one grant agreement, which commingled Capital Project Funds and State and Local Fiscal Recovery Funds, with three of the 13 subrecipients. One of the three subrecipients that received both Capital Project Funds and State and Local Fiscal Recovery Funds had its fiscal year 2023 Single Audit on the Federal Audit Clearinghouse. This subrecipient incorrectly reported all $10 million as Capital Project Funds (ALN 21.029) on its Schedule of Expenditures of Federal Awards when only $3,333,333 should have been reported under ALN 21.029. Where sampling was performed, the audit used a non-statistical sampling method.
This finding, in combination with the finding regarding required audits (Finding 2024-03), results in a modified opinion for the subrecipient monitoring compliance requirement.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend Career and Technical Education:
• Communicate all required information of 2 CFR 200.332(b) to subrecipients;
• Develop procedures to ensure grant agreement templates are updated and that all Coronavirus Capital Projects Fund award information is communicated to subrecipients; and,
• Reissue grant agreements to outline the required information.
CAREER AND TECHNICAL EDUCATION RESPONSE
The Department agrees with this recommendation
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services (DHHS) charged WIC special formula distribution center food outlay costs to the wrong Federal fiscal year.
CRITERIA
Federal regulation, 2 CFR 200.403(h), states, in part, in order to be allowable under Federal awards, costs must be incurred during the approved budget period.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
The Department of Health and Human Services does not have a procedure to ensure special formula distribution center food outlays are applied to the correct Federal fiscal year.
EFFECT
The WIC special formula distribution center food outlay costs charged to the wrong Federal fiscal year resulted in unallowable costs to the Federal fiscal year in which they were charged since the costs were outside of the period of performance for grant. This also impacted the accuracy of Federal fiscal year expenses reported to USDA Food and Nutrition Services.
CONTEXT
State agencies can only charge allowable costs for obligations incurred during the grant's period of performance. The WIC grant is available for one year, October 1 through September 30, and only obligations incurred during that period can be charged to the grant. The Department of Health and Human Services incurred costs in August 2022 for FFY 2022 for special formula distribution center food outlays that were paid in February 2023 and charged to FFY 2023.
A random sample test identified a known error amount is $15,451 with likely projected questioned costs of $71,642. Twenty-six special formula distribution center payments were made during the audit period totaling $604,441. Aside from the projection and based on support provided by DHHS, eight special formula distribution center payments, in addition to the known error from sample testing, totaling $198,289, are likely charged to the incorrect Federal fiscal year. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services establish procedures to ensure WIC special formula distribution center food outlay costs are charged to the proper Federal fiscal year. We also recommend the Department of Health and Human Services work with U.S. Food and Nutrition Services to complete a post closeout adjustment to accurately reflect expenses within the correct Federal fiscal years.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Health and Human Services (DHHS) charged WIC special formula distribution center food outlay costs to the wrong Federal fiscal year.
CRITERIA
Federal regulation, 2 CFR 200.403(h), states, in part, in order to be allowable under Federal awards, costs must be incurred during the approved budget period.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
The Department of Health and Human Services does not have a procedure to ensure special formula distribution center food outlays are applied to the correct Federal fiscal year.
EFFECT
The WIC special formula distribution center food outlay costs charged to the wrong Federal fiscal year resulted in unallowable costs to the Federal fiscal year in which they were charged since the costs were outside of the period of performance for grant. This also impacted the accuracy of Federal fiscal year expenses reported to USDA Food and Nutrition Services.
CONTEXT
State agencies can only charge allowable costs for obligations incurred during the grant's period of performance. The WIC grant is available for one year, October 1 through September 30, and only obligations incurred during that period can be charged to the grant. The Department of Health and Human Services incurred costs in August 2022 for FFY 2022 for special formula distribution center food outlays that were paid in February 2023 and charged to FFY 2023.
A random sample test identified a known error amount is $15,451 with likely projected questioned costs of $71,642. Twenty-six special formula distribution center payments were made during the audit period totaling $604,441. Aside from the projection and based on support provided by DHHS, eight special formula distribution center payments, in addition to the known error from sample testing, totaling $198,289, are likely charged to the incorrect Federal fiscal year. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services establish procedures to ensure WIC special formula distribution center food outlay costs are charged to the proper Federal fiscal year. We also recommend the Department of Health and Human Services work with U.S. Food and Nutrition Services to complete a post closeout adjustment to accurately reflect expenses within the correct Federal fiscal years.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services, Emergency Rental Assistance (ERA) program, bypassed its two tier review process used for determining program eligibility and the approved funding decision amount that is paid to ERA recipients. Approximately 10% of all ERA payments during the audit period, totaling approximately $8.2 million, were paid from eligibility determinations where the two tier review was bypassed.
CRITERIA
• 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
• DHHS's ERA Policies & Procedures outlines its Tier 1 and Tier 2 reviews for its ERA application eligibility process.
CAUSE
The Department of Health and Human Services, Emergency Rental Assistance (ERA) program, did not require its two tier review of ERA applications and assistance amounts during the entirety of the audit period. The program experienced significant influxes of applications at various times during the audit period which caused a backlog on application processing. To help ensure individuals applying for assistance weren't excessively delayed, the program decided to bypass its two tier review process of eligibility and funding decision amount to alleviate backlog more quickly.
EFFECT
The Department determined applicant program eligibility and made assistance payments through a single reviewer process resulting in a higher risk of both program ineligibility and inaccurate payment amounts. While no eligibility errors were identified through compliance testing, the bypass of its two tier review process created a control environment inadequate to reduce the risk of eligibility related errors. It was noted that Federal ERA FAQ Guidance states that, "grantees are encouraged to rely on a household's self-attestations for purposes of confirming eligibility" (FAQ 1) and "the grantee may rely on a self-attestation of household income without further verification if the applicant confirms in their application or other document that they are unable to provide documentation of their income" (FAQ 4).
CONTEXT
During the audit period, the program paid over $85 million of Federal ERA assistance to those with housing instability or risk of homelessness. Approximately $8.2 million of these payments did not go through the program's two tier eligibility review process. This translates to 7,853 out of the 94,172 payment numbers during the audit period having the same reviewer for both tier 1 and tier 2 review.
The State Auditor's Office performed eligibility testing of 60 applications and the associated assistance payments and did not identify any eligibility errors. More specifically, 20 of the 60 tested were from the applications with the same reviewer for both tier 1 and tier 2 review. While the 20 had the same reviewer for both tiers of review, no errors were identified in the testing of eligibility. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services follow its ERA program policies and procedures surrounding its two tier eligibility review process to ensure the control environment reduces the risk of eligibility determination related errors and associated funding decision errors.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services, Homeowner's Assistance Fund (HAF) program, made assistance payments in excess of the supported payment amounts. More specifically, 2 of the 60 eligibility payments reviewed resulted in actual overpayments of $14,993 and additional likely questioned costs of $317,445 when projected to the entire population. One of these errors was identified from a population of applications that had two separate reviewers during application and funding amount processing while the other error was derived from the population that had the same reviewer for the application and funding amount decision processing.
CRITERIA
• 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
• 2 CFR 200.302(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
• DHHS's HAF Policies & Procedures outlines its Tier 1 and Tier 2 reviews for its HAF application eligibility process.
CAUSE
The Department of Health and Human Services, Homeowner's Assistance Fund (HAF) program, did not have procedures in place to ensure assistance payments did not exceed the amounts on supporting documentation provided by the recipient.
EFFECT
The Department issued assistance payments for amounts greater than the underlying support for two unique households.
CONTEXT
During the audit period, the program paid over $32 million of Federal HAF assistance to citizens of North Dakota. Approximately $1.75 million of these payments did not go through the program's two tier eligibility review process. This translates to 1,323 out of the 34,432 payments during the audit period having the same reviewer for both tier 1 and tier 2 review.
The State Auditor's Office performed eligibility testing of 60 applications with 20 of the 60 being from the applications that had the same reviewer for both tier 1 and tier 2 review and 40 being from applications with different reviewers for tier 1 and tier 2 review. From the 20 applications and associated payments with the same reviewer, one overpayment of $2,993.82 was identified which projected to $11,953.30. From the 40 applications with different reviewers, one overpayment of $12,000 was noted which projected to $320,485.56. In aggregate, these errors totaled $14,993.82 with an additional likely questioned cost of $317,445. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services implement procedures and ensure the funding decision and payment amounts are supported by the applicant provided documentation. Additionally, we recommend the Department ensure the improper payments are recouped through the HAF program's refunding process.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Human Services made payments under the Vocational Rehabilitation program outside of the 2021 and 2022 grant award periods of performance which was 10/1/20 - 9/30/21, and 10/1/21-9/30/22 with an allowable liquidation period, to pay for obligations, through 12/31/2022 and 12/31/2023, respectively. Payments made after the liquidation period totaled $1,495.35 for the 2021 grant. Payments obligated after the obligation period totaled $23,340 for the 2021 grant and $7,156 for the 2022 grant.
CRITERIA
The following criteria requires federal funds to be obligated by the end of the two-year period of performance window and those obligations must be liquidated within 90 days after the end date of period of performance.
2 CFR 200.343 requires:
" Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award.
34 CFR 361.64 requires:
" (a) Except as provided in paragraph (b) of this section, any Federal funds, including reallotted funds, that are appropriated for a fiscal year to carry out a program under this part that are not obligated by the State by the beginning of the succeeding fiscal year and any program income received during a fiscal year that is not obligated by the State by the beginning of the succeeding fiscal year remain available for obligation by the State during that succeeding fiscal year.
(b) Federal funds appropriated for a fiscal year remain available for obligation in the succeeding fiscal year only to the extent that the State met the matching requirement for those Federal funds by obligating, in accordance with 34 CFR 76.707, the non-Federal share in the fiscal year for which the funds were appropriated."
The following criteria pertains to the establishment and maintenance of effective internal control to ensure payments are made within the correct period of performance.
45 CFR 75.303 states the non-Federal entity must, "establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award."
CAUSE
The Department of Health and Human Services (DHHS), Vocational Rehabilitation Program, allowed payments to universities for tuition to be charged during the federal grant prior to the period when the service was provided. This issue was noted in three of five errors found in sampling and affected both the FFY 2021 and FFY 2022 grants. The remaining two errors were a result of expenditures being assigned improper coding which was not identified during the regular period of performance reviews performed by DHHS. The first occurred prior to the implementation of the period of performance reviews and the second was an expenditure to another state agency that was evaluated by the agency's review using the date of the check rather than the dates on the invoice.
EFFECT
Known unallowable costs totaling $30,496. were charged to the grants due to being obligated or liquidated after the period of performance. When projected to the population, an additional $50,372 in errors are likely.
CONTEXT
The Department of Health and Human Services had 395 payments totaling $514,546 after the period of performance for the FFY2021 and FY2022 federal grants. Of this amount, $26,367 were tuition fee payments determined to be the total population of known questioned costs related to tuition fees. $36,969 of the remaining population were sampled and $4,128 were errors. These errors projected to $54,401. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-021 was reported in the immediate prior year. Findings 2020-019, 2018-031, and 2016-053 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Health and Human Services improve procedures to review transactions for period of performance corrections to prevent and detect payments from being charged to the Vocational Rehabilitation program outside the period of performance.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services made payments under the Temporary Assistance for Needy Families program and recorded the payments to an incorrect grant year. The expenditures were incurred prior to the start of the period of performance of the grants. Of the errors found $40,420 was incorrectly charged to federal fiscal year 2023 grant and $37,702 was incorrectly charged to the federal fiscal year 2024 grant without obtaining federal approval.
CRITERIA
45 CFR 75.309 states that a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the HHS awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
The Department of Health and Human Services, Temporary Assistance for Needy Families, incorrectly interpreted the period of performance requirements and the start date for each grant award.
EFFECT
Costs totaling $78,113 were charged to the incorrect grant award.
CONTEXT
The Department of Health and Human Services, Temporary Assistance for Needy Families program, had non-benefit expenditures of $3,887,368 through 235 vouchers. 2 of the 24 vouchers that were sampled were found to be paid from an incorrect grant year which resulted in known questioned costs of $78,113 and, when projected to the population, additional likely questioned costs of $182,730. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services follow period of performance time frames when paying expenditures under grant awards and, if paying expenditures prior to the start of the grant award, federal approval is obtained.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Due to a transposition error in DHHS's fiscal office a payment was approved that was incorrect and was not supported by proper documentation. This resulted in a known questioned cost of $29,000. When projected to the population, additional likely questioned costs of $160,247 were calculated.
For the month of January 2024, a foster parent of three unaccompanied refugee minors should have received a payment for $3,255 based on foster care rates and how many days of January in placement. The payment amount was transposed, and payment was incorrectly made for $32,255 to the foster parent. Prior to this error, the foster parent received $3,000-$3,800 per month from the program. Following this error payments decreased due to one child leaving the program and the foster parent received $2,100 to $2,500 per month from the program. The foster parent stopped participating in the unaccompanied refugee minor program after the minors in their care were reunited with relatives, therefore leaving the program.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
45 CFR 400.49 states the State agency or its designee agency(s) must maintain a procedure to ensure recovery of overpayments and correction of underpayments in the Refugee Cash Assistance (RCA) program.
45 CFR 400.112 states Foster care maintenance payments must be provided under a State's program under title IV-E of the Social Security Act if a child is eligible under that program.
CAUSE
Payment was entered incorrectly into the states accounting system and the error was not detected during the manual review process. Also, the unaccompanied refugee minors' program coordinator was not contacted by the foster parent regarding the overpayment.
EFFECT
Overpayments were made to foster parents receiving unaccompanied refugee minors' funds.
CONTEXT
There were 529 unaccompanied minor foster payments that occurred during our audit period of July 1, 2022, through June 30, 2024, for a total of $799,439. The audit selected a random sample of seven of 28 unaccompanied minors and tested 95 payments to the foster parents of these minors. The audit identified one known error in the amount of $29,000. When projected to the population, additional likely questioned costs of $160,247 were calculated. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Medicaid program integrity unit within DHHS is not independent from other Medicaid operations. The program integrity unit has system access that allows the unit to process and adjudicate Medicaid claims within the Medicaid Management Information System (MMIS).
The audit compared claims by User IDs creating and last editing the claims to the employees by name within the program integrity unit. A review of access of MMIS identified 3 members of the program integrity unit with access within MMIS to process (submit, validate, edit, and override) claims during the audit period of July 1, 2022, through June 30, 2024. The audit did not identify any transactions where the 3 employees either created or last edited claims.
CRITERIA
The GAO Greenbook Principle 11.14 states "Management designs control activities to limit user access to information technology through authorization control activities such as providing a unique user identification or token to authorized users. These control activities may restrict authorized users to the applications or functions commensurate with their assigned responsibilities, supporting an appropriate segregation of duties."
The GAO Greenbook Principle 10.03 states “Management divides or segregates key duties and responsibilities among different people to reduce the risk of error, misuse, or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event.”
Per DHHS' security plan for MMIS "The organization employs the concept of least privilege, allowing only authorized accesses for users (and processes acting on behalf of users) which are necessary to accomplish assigned tasks in accordance with missions and business functions."
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
Members of the program integrity unit are given access within MMIS that allows them to adjudicate and process claims.
EFFECT
There is a risk of self-review that the program integrity employee may review providers related to or actual claims that the same employee previously processed or adjudicated.
CONTEXT
42 CFR 456.2 requires "The Medicaid agency must implement a statewide surveillance and utilization control program that safeguards against unnecessary or inappropriate use of Medicaid services and against excess payments." The program integrity unit is the team responsible for performing utilization reviews and other audits of claims and providers within the Medicaid program. During this period there were 12,228,253 claims and over $2 billion Medicaid expenditures reported on the 2023 and 2024 SEFAs. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that DHHS restrict access of the program integrity unit employees within MMIS from processing and adjudicating claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services disagrees with the finding. The federal regulations do not explicitly mandate the separation of duties between employees conducting audits and those processing claims. While 42 CFR 456.2 requires Medicaid agencies to implement a surveillance and utilization control program, it does not specifically require the segregation of these roles. The regulation promotes control measures but does not mandate a distinct separation of duties.
Based on this, we do not support this recommendation, as it exceeds the requirements outlined in the applicable federal rules. HHS remains committed to maintaining strong internal controls and believe our current structure aligns with regulatory expectations.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the audit did not identify noncompliance due to the lack of segregation of duties, this doesn’t remove the requirement of 45 CFR 75.303 to have proper internal controls and the guidance of the GAO Greenbook. This includes separating the responsibilities for authorizing, processing and recording, and reviewing the transactions.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Medicaid program integrity unit within DHHS is not independent from other Medicaid operations. The program integrity unit has system access that allows the unit to process and adjudicate Medicaid claims within the Medicaid Management Information System (MMIS).
The audit compared claims by User IDs creating and last editing the claims to the employees by name within the program integrity unit. A review of access of MMIS identified 3 members of the program integrity unit with access within MMIS to process (submit, validate, edit, and override) claims during the audit period of July 1, 2022, through June 30, 2024. The audit did not identify any transactions where the 3 employees either created or last edited claims.
CRITERIA
The GAO Greenbook Principle 11.14 states "Management designs control activities to limit user access to information technology through authorization control activities such as providing a unique user identification or token to authorized users. These control activities may restrict authorized users to the applications or functions commensurate with their assigned responsibilities, supporting an appropriate segregation of duties."
The GAO Greenbook Principle 10.03 states “Management divides or segregates key duties and responsibilities among different people to reduce the risk of error, misuse, or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event.”
Per DHHS' security plan for MMIS "The organization employs the concept of least privilege, allowing only authorized accesses for users (and processes acting on behalf of users) which are necessary to accomplish assigned tasks in accordance with missions and business functions."
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
Members of the program integrity unit are given access within MMIS that allows them to adjudicate and process claims.
EFFECT
There is a risk of self-review that the program integrity employee may review providers related to or actual claims that the same employee previously processed or adjudicated.
CONTEXT
42 CFR 456.2 requires "The Medicaid agency must implement a statewide surveillance and utilization control program that safeguards against unnecessary or inappropriate use of Medicaid services and against excess payments." The program integrity unit is the team responsible for performing utilization reviews and other audits of claims and providers within the Medicaid program. During this period there were 12,228,253 claims and over $2 billion Medicaid expenditures reported on the 2023 and 2024 SEFAs. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that DHHS restrict access of the program integrity unit employees within MMIS from processing and adjudicating claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services disagrees with the finding. The federal regulations do not explicitly mandate the separation of duties between employees conducting audits and those processing claims. While 42 CFR 456.2 requires Medicaid agencies to implement a surveillance and utilization control program, it does not specifically require the segregation of these roles. The regulation promotes control measures but does not mandate a distinct separation of duties.
Based on this, we do not support this recommendation, as it exceeds the requirements outlined in the applicable federal rules. HHS remains committed to maintaining strong internal controls and believe our current structure aligns with regulatory expectations.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the audit did not identify noncompliance due to the lack of segregation of duties, this doesn’t remove the requirement of 45 CFR 75.303 to have proper internal controls and the guidance of the GAO Greenbook. This includes separating the responsibilities for authorizing, processing and recording, and reviewing the transactions.
CONDITION
The Medicaid program integrity unit within DHHS is not independent from other Medicaid operations. The program integrity unit has system access that allows the unit to process and adjudicate Medicaid claims within the Medicaid Management Information System (MMIS).
The audit compared claims by User IDs creating and last editing the claims to the employees by name within the program integrity unit. A review of access of MMIS identified 3 members of the program integrity unit with access within MMIS to process (submit, validate, edit, and override) claims during the audit period of July 1, 2022, through June 30, 2024. The audit did not identify any transactions where the 3 employees either created or last edited claims.
CRITERIA
The GAO Greenbook Principle 11.14 states "Management designs control activities to limit user access to information technology through authorization control activities such as providing a unique user identification or token to authorized users. These control activities may restrict authorized users to the applications or functions commensurate with their assigned responsibilities, supporting an appropriate segregation of duties."
The GAO Greenbook Principle 10.03 states “Management divides or segregates key duties and responsibilities among different people to reduce the risk of error, misuse, or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event.”
Per DHHS' security plan for MMIS "The organization employs the concept of least privilege, allowing only authorized accesses for users (and processes acting on behalf of users) which are necessary to accomplish assigned tasks in accordance with missions and business functions."
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
Members of the program integrity unit are given access within MMIS that allows them to adjudicate and process claims.
EFFECT
There is a risk of self-review that the program integrity employee may review providers related to or actual claims that the same employee previously processed or adjudicated.
CONTEXT
42 CFR 456.2 requires "The Medicaid agency must implement a statewide surveillance and utilization control program that safeguards against unnecessary or inappropriate use of Medicaid services and against excess payments." The program integrity unit is the team responsible for performing utilization reviews and other audits of claims and providers within the Medicaid program. During this period there were 12,228,253 claims and over $2 billion Medicaid expenditures reported on the 2023 and 2024 SEFAs. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that DHHS restrict access of the program integrity unit employees within MMIS from processing and adjudicating claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services disagrees with the finding. The federal regulations do not explicitly mandate the separation of duties between employees conducting audits and those processing claims. While 42 CFR 456.2 requires Medicaid agencies to implement a surveillance and utilization control program, it does not specifically require the segregation of these roles. The regulation promotes control measures but does not mandate a distinct separation of duties.
Based on this, we do not support this recommendation, as it exceeds the requirements outlined in the applicable federal rules. HHS remains committed to maintaining strong internal controls and believe our current structure aligns with regulatory expectations.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the audit did not identify noncompliance due to the lack of segregation of duties, this doesn’t remove the requirement of 45 CFR 75.303 to have proper internal controls and the guidance of the GAO Greenbook. This includes separating the responsibilities for authorizing, processing and recording, and reviewing the transactions.
CONDITION
Providers did not submit proper documentation for care provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 1 of the total 25 claims tested by the auditors.
The error resulted in an improper payment totaling $176. When projected to the entire population, the additional likely federal questioned costs totaled $281,698.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Money Follows the Person (MFP) is a federally funded Medicaid program.
• 42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
• 42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests.
EFFECT
An unallowable payment was made to the provider who did not submit proper documentation when selected for audit.
CONTEXT
There were 28,533 MFP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during the period of the claim. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Division of Emergency Services did not correctly and timely report subawards on Federal Funding Accountability and Transparency Act (FFATA) reports. The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
The Division of Emergency Services corrected their procedures in March 2024 to report new subawards based on obligation amount. Expanded testing from USASpending.gov was performed to ensure that new subawards reported obligated subaward amounts. This test found that, while still untimely, all subawards with action dates from March 2024-June 2024 were properly reported with the obligated subaward amounts.
The auditors tested 37 subaward obligations. 26 obligations were selected based on payments made during the audit period. Due to the agency correcting their procedures, an additional 11 obligations were selected from USASpending.gov with subaward action dates after March 1, 2024. One of the 37 subawards, obligated for $15,888,022 in federal funds, was not reported at all for FFATA. Five of 37 tested subawards were reported for the payment amount rather than the obligation amount of the subaward. The errors in obligation amount for these five subawards netted to $1,490,193.12. 26 out of 37 tested subawards were not reported by the end of the month following the month of the obligation date. For context, 17 of the 26 errors were reported within 2 weeks after end of the month following the month of obligation. Other key data elements were correct for reported obligations.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
The subaward information is then available to the public on the USA Spending website for transparency.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards.
CONTEXT
During the audit period, the agency made payments on 308 subawards and 11 disasters. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Division of Emergency Services ensures timely and accurate submission of FFATA reports in accordance with federal regulations.
ADJUTANT GENERAL RESPONSE
The Adjutant General agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Division of Emergency Services did not correctly and timely report subawards on Federal Funding Accountability and Transparency Act (FFATA) reports. The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
The Division of Emergency Services corrected their procedures in March 2024 to report new subawards based on obligation amount. Expanded testing from USASpending.gov was performed to ensure that new subawards reported obligated subaward amounts. This test found that, while still untimely, all subawards with action dates from March 2024-June 2024 were properly reported with the obligated subaward amounts.
The auditors tested 37 subaward obligations. 26 obligations were selected based on payments made during the audit period. Due to the agency correcting their procedures, an additional 11 obligations were selected from USASpending.gov with subaward action dates after March 1, 2024. One of the 37 subawards, obligated for $15,888,022 in federal funds, was not reported at all for FFATA. Five of 37 tested subawards were reported for the payment amount rather than the obligation amount of the subaward. The errors in obligation amount for these five subawards netted to $1,490,193.12. 26 out of 37 tested subawards were not reported by the end of the month following the month of the obligation date. For context, 17 of the 26 errors were reported within 2 weeks after end of the month following the month of obligation. Other key data elements were correct for reported obligations.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
The subaward information is then available to the public on the USA Spending website for transparency.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards.
CONTEXT
During the audit period, the agency made payments on 308 subawards and 11 disasters. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Division of Emergency Services ensures timely and accurate submission of FFATA reports in accordance with federal regulations.
ADJUTANT GENERAL RESPONSE
The Adjutant General agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
We tested four infrastructure projects that used State and Local Fiscal Recovery Funds: one new construction project at Bismarck State College – Polytechnic Building, one renovation project at Minot State University – Hartnett Hall, and one new construction project and one renovation project at University of North Dakota - Airport Apron and Merrifield Hall, respectively. We noted three of the four infrastructure projects tested did not follow procurement rules for architect and Construction Management at-Risk (CMaR) services. We noted the following:
Bismarck State College - Polytechnic Building:
• The amount of the contract was $42,205,831 and questioned costs were $25,253,685.
• The CMaR selection committee was improperly composed as a registered engineer and a registered architect were unknown at the time of solicitation.
• The CMaR request for qualifications were improperly evaluated as a registered engineer and a registered architect did not evaluate the submittals.
Minot State University - Hartnett Hall:
• The amount of the contract was $23,738,195 and questioned costs were $22,575,329.
• Architect services were evaluated on a criteria item, understanding the project, which was not disclosed in the request for qualifications nor listed in N.D.C.C. There was no addendum issued.
• The CMaR selection committee was improperly composed after the request for qualifications was issued. A change was made to the selection committee which left it with no registered architect.
• The CMaR request for qualifications did not have all the required information in it; the number of persons to be included in the final list were not listed.
• The CMaR request for qualifications were improperly evaluated as a registered architect did not evaluate the submittals.
University of North Dakota - Merrifield Hall:
• The amount of the contract was $40,829,950 and questioned costs were $27,554,154.
• The CMaR selection committee was improperly composed as there was no registered engineer and the licensed contractor had an inactive license during part or all of their selection committee duties.
• The CMaR request for proposal did not have all the required information in it. The selection committee members were not listed, the evaluating criteria and relative weight of each were not listed, and the number of persons to be included in the final list were not listed.
• The CMaR request for proposals were improperly evaluated as a registered engineer did not evaluate the submittals, the licensed contractor had an inactive license during part or all of their selection committee duties – which includes evaluations, and the submittals were not evaluated on all of the required criteria – the person’s compliance with state and federal law was not evaluated.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
N.D.C.C. 54-44.7-03, subsection 5, states in part, the agency selection committee shall evaluate each of the persons or firms interviewed on the basis of the following criteria:
a. Past performance.
b. The ability of professional personnel.
c. Willingness to meet time and budget requirements.
d. Location, with higher priority given to firms headquartered in North Dakota.
e. Recent, current, and projected workloads of the persons or firms.
f. Related experience on similar projects.
g. Recent and current work for the agency
N.D.C.C. 48-01.2-20, subsection 1, states, A governing body electing to utilize a construction management at-risk delivery process for a proposed public improvement shall create a selection committee composed of:
a. An administrative individual from the governing body.
b. A registered architect.
c. A registered engineer.
d. A licensed contractor.
N.D.C.C. 48-01.2-20, subsection 3, lists fourteen items that must be established as content in the request for qualifications, which includes the listing of selection committee members, the evaluating criteria and relative weight of each, and the number of persons to be included in the final list.
N.D.C.C. 48-01.2-20, subsections 5 and 6, states that the selection committee needs to determine the appropriate evaluation criteria for the eight qualification criteria items listed. The selection committee shall evaluate each submission based on the qualification criteria items listed in subsection 5, which includes the person's compliance with state and federal law.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
Bismarck State College:
• There may have been a slight confusion of what and which duties the selection committee was required to perform.
Minot State University:
• They are unsure why the additional criteria was used to evaluate the architect request for qualifications.
• The selection committee changed after its initial composition leaving the selection committee with no registered architect.
• The number of persons to be included in the final list was inadvertently overlooked.
University of North Dakota:
• They thought that a registered engineer would fulfill the selection committee requirement; however, their registered engineer was registered in Nebraska not North Dakota. The licensed contractor had a lapse in an active license for all or part of their selection committee duties.
• The required information in the request for proposal and the proper evaluating criteria was an oversight.
EFFECT
By not following N.D.C.C. for the architect and CMaR services, these service contracts may have been awarded incorrectly.
CONTEXT
Bismarck State College, Minot State University and the University of North Dakota were allocated $35 million, $25 million, and $55 million, respectively, from the state fiscal recovery fund for specific renovation and construction projects. These institutions were allowed to enter into contracts to procure goods and services with only a subset of federal procurement requirements being applicable to this type of federal funding - recipients must adhere to the same policies and procedures they use for non-federal procurements. These three institutions were allocated a total $115 million from the state fiscal recovery fund and improperly awarded $106.8 million in contracts due to not adhering to procurement rules. $75.4 million was spent on these improperly awarded contracts during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that Bismarck State College, Minot State University and the University of North Dakota update their procedures to review and adhere to both the architect and Construction Management at-Risk selection processes to ensure compliance with the N.D.C.C. surrounding procurement for construction projects.
UNIVERSITY SYSTEM RESPONSE
Bismarck State College agrees with the recommendation.
Minot State University agrees with the recommendation.
University of North Dakota agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
We tested four infrastructure projects that used State and Local Fiscal Recovery Funds: one new construction project at Bismarck State College – Polytechnic Building, one renovation project at Minot State University – Hartnett Hall, and one new construction project and one renovation project at University of North Dakota - Airport Apron and Merrifield Hall, respectively. We noted three of the four infrastructure projects tested did not follow procurement rules for architect and Construction Management at-Risk (CMaR) services. We noted the following:
Bismarck State College - Polytechnic Building:
• The amount of the contract was $42,205,831 and questioned costs were $25,253,685.
• The CMaR selection committee was improperly composed as a registered engineer and a registered architect were unknown at the time of solicitation.
• The CMaR request for qualifications were improperly evaluated as a registered engineer and a registered architect did not evaluate the submittals.
Minot State University - Hartnett Hall:
• The amount of the contract was $23,738,195 and questioned costs were $22,575,329.
• Architect services were evaluated on a criteria item, understanding the project, which was not disclosed in the request for qualifications nor listed in N.D.C.C. There was no addendum issued.
• The CMaR selection committee was improperly composed after the request for qualifications was issued. A change was made to the selection committee which left it with no registered architect.
• The CMaR request for qualifications did not have all the required information in it; the number of persons to be included in the final list were not listed.
• The CMaR request for qualifications were improperly evaluated as a registered architect did not evaluate the submittals.
University of North Dakota - Merrifield Hall:
• The amount of the contract was $40,829,950 and questioned costs were $27,554,154.
• The CMaR selection committee was improperly composed as there was no registered engineer and the licensed contractor had an inactive license during part or all of their selection committee duties.
• The CMaR request for proposal did not have all the required information in it. The selection committee members were not listed, the evaluating criteria and relative weight of each were not listed, and the number of persons to be included in the final list were not listed.
• The CMaR request for proposals were improperly evaluated as a registered engineer did not evaluate the submittals, the licensed contractor had an inactive license during part or all of their selection committee duties – which includes evaluations, and the submittals were not evaluated on all of the required criteria – the person’s compliance with state and federal law was not evaluated.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
N.D.C.C. 54-44.7-03, subsection 5, states in part, the agency selection committee shall evaluate each of the persons or firms interviewed on the basis of the following criteria:
a. Past performance.
b. The ability of professional personnel.
c. Willingness to meet time and budget requirements.
d. Location, with higher priority given to firms headquartered in North Dakota.
e. Recent, current, and projected workloads of the persons or firms.
f. Related experience on similar projects.
g. Recent and current work for the agency
N.D.C.C. 48-01.2-20, subsection 1, states, A governing body electing to utilize a construction management at-risk delivery process for a proposed public improvement shall create a selection committee composed of:
a. An administrative individual from the governing body.
b. A registered architect.
c. A registered engineer.
d. A licensed contractor.
N.D.C.C. 48-01.2-20, subsection 3, lists fourteen items that must be established as content in the request for qualifications, which includes the listing of selection committee members, the evaluating criteria and relative weight of each, and the number of persons to be included in the final list.
N.D.C.C. 48-01.2-20, subsections 5 and 6, states that the selection committee needs to determine the appropriate evaluation criteria for the eight qualification criteria items listed. The selection committee shall evaluate each submission based on the qualification criteria items listed in subsection 5, which includes the person's compliance with state and federal law.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
Bismarck State College:
• There may have been a slight confusion of what and which duties the selection committee was required to perform.
Minot State University:
• They are unsure why the additional criteria was used to evaluate the architect request for qualifications.
• The selection committee changed after its initial composition leaving the selection committee with no registered architect.
• The number of persons to be included in the final list was inadvertently overlooked.
University of North Dakota:
• They thought that a registered engineer would fulfill the selection committee requirement; however, their registered engineer was registered in Nebraska not North Dakota. The licensed contractor had a lapse in an active license for all or part of their selection committee duties.
• The required information in the request for proposal and the proper evaluating criteria was an oversight.
EFFECT
By not following N.D.C.C. for the architect and CMaR services, these service contracts may have been awarded incorrectly.
CONTEXT
Bismarck State College, Minot State University and the University of North Dakota were allocated $35 million, $25 million, and $55 million, respectively, from the state fiscal recovery fund for specific renovation and construction projects. These institutions were allowed to enter into contracts to procure goods and services with only a subset of federal procurement requirements being applicable to this type of federal funding - recipients must adhere to the same policies and procedures they use for non-federal procurements. These three institutions were allocated a total $115 million from the state fiscal recovery fund and improperly awarded $106.8 million in contracts due to not adhering to procurement rules. $75.4 million was spent on these improperly awarded contracts during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that Bismarck State College, Minot State University and the University of North Dakota update their procedures to review and adhere to both the architect and Construction Management at-Risk selection processes to ensure compliance with the N.D.C.C. surrounding procurement for construction projects.
UNIVERSITY SYSTEM RESPONSE
Bismarck State College agrees with the recommendation.
Minot State University agrees with the recommendation.
University of North Dakota agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The University of North Dakota has federally funded equipment that is not being properly identified with the corresponding major equipment asset tags on the asset. We tested a total of 21 capital assets and 10 of those were at the University of North Dakota where we found 5 assets without any major equipment identification tags on them for an error rate of 50%.
CRITERIA
2 CFR section 200.313(d)(3) states in part that a control system must be in place to ensure safeguards for preventing property loss, damage, or theft.
2 CFR section 200.313(b) states in part that a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures.
The University of North Dakota Capital Asset policy states in part that the campus department is responsible for using correct chart field when acquiring all assets, tagging and tracking their major equipment, and completing annual inventory of all major equipment.
CAUSE
The departments and/or principal investigator (PI) purchasing the equipment did not correctly attach the major equipment tags to the asset as required by the University of North Dakota's Capital Asset policy.
EFFECT
There is noncompliance with federal rules and regulations as well as the University of North Dakota's Capital Asset policy, thus increasing the risk that federally funded equipment is not properly identified.
CONTEXT
For the audit period, the Research and Development Cluster had 207 equipment asset additions ($9,958,360). All the issues noted originated from one single department at the University of North Dakota. The insufficient tagging of capital asset deviations seems to be an isolated incident contained to this department, which in total for our audit period had 16 new additions totaling $419,060. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota ensure federally funded equipment is properly tagged.
UNIVERSITY SYSTEM RESPONSE
The University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
We tested four infrastructure projects that used State and Local Fiscal Recovery Funds: one new construction project at Bismarck State College – Polytechnic Building, one renovation project at Minot State University – Hartnett Hall, and one new construction project and one renovation project at University of North Dakota - Airport Apron and Merrifield Hall, respectively. We noted three of the four infrastructure projects tested did not follow procurement rules for architect and Construction Management at-Risk (CMaR) services. We noted the following:
Bismarck State College - Polytechnic Building:
• The amount of the contract was $42,205,831 and questioned costs were $25,253,685.
• The CMaR selection committee was improperly composed as a registered engineer and a registered architect were unknown at the time of solicitation.
• The CMaR request for qualifications were improperly evaluated as a registered engineer and a registered architect did not evaluate the submittals.
Minot State University - Hartnett Hall:
• The amount of the contract was $23,738,195 and questioned costs were $22,575,329.
• Architect services were evaluated on a criteria item, understanding the project, which was not disclosed in the request for qualifications nor listed in N.D.C.C. There was no addendum issued.
• The CMaR selection committee was improperly composed after the request for qualifications was issued. A change was made to the selection committee which left it with no registered architect.
• The CMaR request for qualifications did not have all the required information in it; the number of persons to be included in the final list were not listed.
• The CMaR request for qualifications were improperly evaluated as a registered architect did not evaluate the submittals.
University of North Dakota - Merrifield Hall:
• The amount of the contract was $40,829,950 and questioned costs were $27,554,154.
• The CMaR selection committee was improperly composed as there was no registered engineer and the licensed contractor had an inactive license during part or all of their selection committee duties.
• The CMaR request for proposal did not have all the required information in it. The selection committee members were not listed, the evaluating criteria and relative weight of each were not listed, and the number of persons to be included in the final list were not listed.
• The CMaR request for proposals were improperly evaluated as a registered engineer did not evaluate the submittals, the licensed contractor had an inactive license during part or all of their selection committee duties – which includes evaluations, and the submittals were not evaluated on all of the required criteria – the person’s compliance with state and federal law was not evaluated.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
N.D.C.C. 54-44.7-03, subsection 5, states in part, the agency selection committee shall evaluate each of the persons or firms interviewed on the basis of the following criteria:
a. Past performance.
b. The ability of professional personnel.
c. Willingness to meet time and budget requirements.
d. Location, with higher priority given to firms headquartered in North Dakota.
e. Recent, current, and projected workloads of the persons or firms.
f. Related experience on similar projects.
g. Recent and current work for the agency
N.D.C.C. 48-01.2-20, subsection 1, states, A governing body electing to utilize a construction management at-risk delivery process for a proposed public improvement shall create a selection committee composed of:
a. An administrative individual from the governing body.
b. A registered architect.
c. A registered engineer.
d. A licensed contractor.
N.D.C.C. 48-01.2-20, subsection 3, lists fourteen items that must be established as content in the request for qualifications, which includes the listing of selection committee members, the evaluating criteria and relative weight of each, and the number of persons to be included in the final list.
N.D.C.C. 48-01.2-20, subsections 5 and 6, states that the selection committee needs to determine the appropriate evaluation criteria for the eight qualification criteria items listed. The selection committee shall evaluate each submission based on the qualification criteria items listed in subsection 5, which includes the person's compliance with state and federal law.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
Bismarck State College:
• There may have been a slight confusion of what and which duties the selection committee was required to perform.
Minot State University:
• They are unsure why the additional criteria was used to evaluate the architect request for qualifications.
• The selection committee changed after its initial composition leaving the selection committee with no registered architect.
• The number of persons to be included in the final list was inadvertently overlooked.
University of North Dakota:
• They thought that a registered engineer would fulfill the selection committee requirement; however, their registered engineer was registered in Nebraska not North Dakota. The licensed contractor had a lapse in an active license for all or part of their selection committee duties.
• The required information in the request for proposal and the proper evaluating criteria was an oversight.
EFFECT
By not following N.D.C.C. for the architect and CMaR services, these service contracts may have been awarded incorrectly.
CONTEXT
Bismarck State College, Minot State University and the University of North Dakota were allocated $35 million, $25 million, and $55 million, respectively, from the state fiscal recovery fund for specific renovation and construction projects. These institutions were allowed to enter into contracts to procure goods and services with only a subset of federal procurement requirements being applicable to this type of federal funding - recipients must adhere to the same policies and procedures they use for non-federal procurements. These three institutions were allocated a total $115 million from the state fiscal recovery fund and improperly awarded $106.8 million in contracts due to not adhering to procurement rules. $75.4 million was spent on these improperly awarded contracts during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that Bismarck State College, Minot State University and the University of North Dakota update their procedures to review and adhere to both the architect and Construction Management at-Risk selection processes to ensure compliance with the N.D.C.C. surrounding procurement for construction projects.
UNIVERSITY SYSTEM RESPONSE
Bismarck State College agrees with the recommendation.
Minot State University agrees with the recommendation.
University of North Dakota agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The University of North Dakota did not follow procurement guidelines in the Research and Development Cluster. We tested 40 items total and 18 of those were for the University of North Dakota. We found two issues (11%) and $115,258 in questioned costs for those two errors. The errors were comprised of the following:
• No documentation was provided to ensure the proper procurement was completed for the purchase of a software license for $116,431. During our audit period, the University of North Dakota expended $39,928 of federal grant funds for the software license.
• Two pieces of equipment were purchased totaling $100,440 and formal bidding was not competed. During the audit period, $75,330 was expended with federal grant funds for the equipment.
When projected against the entire population, the additional likely questioned cost totaled $489,720.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part that when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
2 CFR 200.318 Ii) states in part that the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price.
North Dakota University System Procedure 803.1 states in part that for purchases of $100,000 and over must be purchased using formal sealed bids or a request for proposal. Solicitations must be posted using SPO online with appropriate state bidders list.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not follow procurement requirements when purchasing property and services.
EFFECT
Without following federal and state procurement rules, the University of North Dakota cannot ensure they are properly purchasing property and services at the best available price.
CONTEXT
The University of North Dakota had purchases requiring procurement to vendors for research and development related property and services totaling $6,448,341 in expenditures during fiscal years 2023 and 2024.The University of North Dakota did not properly procure two items tested with $115,258 spent during the audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota properly procure property and services in compliance with federal and state regulations and North Dakota University System procurement requirements.
UNIVERSITY SYSTEM RESPONSE
The University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The University of North Dakota has federally funded equipment that is not being properly identified with the corresponding major equipment asset tags on the asset. We tested a total of 21 capital assets and 10 of those were at the University of North Dakota where we found 5 assets without any major equipment identification tags on them for an error rate of 50%.
CRITERIA
2 CFR section 200.313(d)(3) states in part that a control system must be in place to ensure safeguards for preventing property loss, damage, or theft.
2 CFR section 200.313(b) states in part that a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures.
The University of North Dakota Capital Asset policy states in part that the campus department is responsible for using correct chart field when acquiring all assets, tagging and tracking their major equipment, and completing annual inventory of all major equipment.
CAUSE
The departments and/or principal investigator (PI) purchasing the equipment did not correctly attach the major equipment tags to the asset as required by the University of North Dakota's Capital Asset policy.
EFFECT
There is noncompliance with federal rules and regulations as well as the University of North Dakota's Capital Asset policy, thus increasing the risk that federally funded equipment is not properly identified.
CONTEXT
For the audit period, the Research and Development Cluster had 207 equipment asset additions ($9,958,360). All the issues noted originated from one single department at the University of North Dakota. The insufficient tagging of capital asset deviations seems to be an isolated incident contained to this department, which in total for our audit period had 16 new additions totaling $419,060. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota ensure federally funded equipment is properly tagged.
UNIVERSITY SYSTEM RESPONSE
The University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The State Treasurer's Office did not make subrecipients aware of all required grant award information for the Mineral Leasing Act.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were included in the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
There were 40 awards during the audit period of 7/1/2022 - 6/30/2024. There were 8 awards tested with 8 errors noted. The following criteria were missing:
- (ii) Subrecipient's unique entity identifier;
- (iii) Federal Award Identification Number (FAIN);
- (xiii) Identification of whether the award is R&D; and
- (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414.
- (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimus indirect cost rate.
(ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d).
- (6) Appropriate terms and conditions concerning closeout of the subaward.
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the State Treasurer's Office update its grant award templates to ensure that subrecipients are made award of all required grant award information.
STATE TREASURER’S OFFICE RESPONSE
The Office of the State Treasurer does agree with finding that our grant award template did not make subrecipients aware of all required grant award information for the Mineral Leasing Act as required.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction (DPI) did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following areas:
1. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (CNC) (Assistance Listing number 10.553, 10.555, 10.559) for the 2023 grant year awards (October 2022-September 2023). After an analysis of grants awarded in 2023, we randomly sampled and pulled 11 awards to test. We found that all 11 were not submitted timely. The samples we pulled should have been reported by 4/30/23, 6/30/23, 7/31/23, 9/30/23, 11/30/23, and 1/31/24, but were not reported until 4/3/24 or 4/5/24. DPI explained that this occurred because all CNP reports from March to October of 2023 had to be resubmitted due to the wrong FEIN # being used on the reports. DPI resubmitted these reports on 4/3/24 and 4/5/24. The resubmitting of reports over a year later and without evidence that the reports were initially submitted timely is the reason for the audit finding. Those grant awards totaled $328,815.19.
2. The Department of Public Instruction did not report the subaward information timely for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for the 2024 grant year awards (October 2023-September 2024). After an analysis of grant awards awarded in 2024, we randomly sampled and pulled 4 awards to test. We found one of the four was not reported timely to FFATA. The report should have been submitted by 1/31/24 but it wasn't reported until 3/4/24.
3. The Department of Public Instruction did not report the subaward information for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559) for program months November and December of 2023 of the October 2023-September 2024 grant year. After an analysis of grant awards for that grant year and as reported to the auditor by DPI, it was discovered that 133 subawards should have been reported to FFATA, totaling $1,437,209.93.
4. The Department of Public Instruction did not properly report the subaward action/obligation date in the FSRS system for the Child Nutrition Cluster (Assistance Listing number 10.553, 10.555, 10.556, 10.559, 10.582). DPI staff run the FFATA report from the ND Foods system at the end of every month which is then uploaded into the FSRS system. In the FSRS system, it is listing the subaward action /obligation date as the day the report was pulled which is not the same day that payments are actually made. DPI reported the wrong subaward action/obligation date for all Child Nutrition Cluster samples that were pulled. There is no dollar error for these awards, only the obligation date.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
DPI does not have adequate policies and procedures to ensure accurate and timely reporting for FFATA
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Additionally, federal regulations address actions that federal agencies may impose if a state entity does not comply with the U.S. Constitution, federal statutes, regulations, or the terms and conditions of a federal award. According to 2 CFR 200.208(c), “Specific conditions,” these actions may include
• requiring reimbursement instead of advance payments;
• not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance;
• requiring additional, more detailed financial reports or additional project monitoring;
• requiring the agency to obtain technical or management assistance; or
• establishing other prior approvals.
If the federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, “Remedies for noncompliance,” outlines additional actions the federal agency may take. Depending on the circumstances, these actions may include:
• temporarily withholding payments until the noncompliance has been corrected,
• Denying the use of funds,
• partly or fully suspending or terminating the federal award,
• suspending or debarring the agency,
• withholding further awards for the project or program, or
• pursuing other available legal remedies.
CONTEXT
During our audit period, there were 407 subrecipients receiving Federal grant awards for the Child Nutrition Cluster program totaling $68,351,704. Out of the 407 subrecipients, 309 were over the $30,000 threshold and should have been reported to FFATA. In 2023, there were 164 subrecipients and, in 2024, 145 subrecipients that met the threshold, for a total of $66,879,778. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-022 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction implement policies and procedures to ensure timely and accurate submission of FFATA reports in accordance with federal regulations.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the issues identified.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction incorrectly included neglected or delinquent facilities as part of their Title IIA allocation to Local Educational Agencies (LEA). We selected a sample of 17 in 2022-2023 and 17 in 2023-2024. Of the 17 samples in 2022-2023, we identified a 100% error rate. The total known allocation error identified was $60,026. This amount was the total allocated to negligent and delinquent districts. By allocating this amount to the noneligible districts, the eligible school districts were under allocated by the same amount. This was issue was fixed by the department for the 2023-2024 year and no error were found during the testing of 2023-2024.
CRITERIA
The Elementary and Secondary Education Act of 1965 (ESEA Section 2012(a)(1)) states, the State, acting through the State Educational Agency (DPI), shall award subgrants to eligible local educational agencies (LEA).
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulation, and the terms and conditions of the federal award.
The Elementary and Secondary Education Act of 1965 (ESEA Section 8101(30) states "the term local educational agency means a public board of education or other public authority legally constituted within a state for either administrative control or direction of, or to perform a service function for, public elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a state, or for a combination of school districts or counties that is recognized in a state administrative agency for its public elementary school or secondary schools."
The Elementary and Secondary Education Act of 1965 (ESEA Section 1432) defines Institutions for Neglected or Delinquent Children and Youth as "a public or private residential facility, other than a foster home, that is operated for the care of children who have been committed to the institution or voluntarily placed in the institution under applicable State law, due to abandonment, neglect, or death of their parents or guardian; or a public or private residential facility for the care of children who have deemed adjudicated to be delinquent or in need of supervision."
As Neglected and Delinquent Facilities are operated only for the care of old children who have been committed or placed in their institution due to abandonment, neglect, death of their parents or guardians, or in need of supervision, these facilities are not recognized as Local Educational Agency.
CAUSE
The Department of Public Instruction was unaware that neglected and delinquent facilities could not be included in their Title IIA allocation calculation and on subrecipient's grant awards.
EFFECT
The Department of Public Instruction did not comply with the allocation requirements to LEAs for Title IIA grants. The LEAs eligible to receive funding were allocated less than they should have.
CONTEXT
The Department of Public Instruction allocated $9,834,095 in Federal funds to 169 school districts during the 2022-2023 school year and $9,939,938 in Federal funds to 169 school districts during the 2023-2024 school year. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-032 was reported in the immediate prior year.
The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction ensure the Title IIA allocations are calculated based on the Federal requirements.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances.
CRITERIA
2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F.
2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means.
2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC).
2 CFR 200.303(a) states that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with statutes, regulations, and the terms and condition of the federal award.
CAUSE
The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures.
EFFECT
Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F.
CONTEXT
The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270.
Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Public Instruction:
• Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements;
• Issue management decisions within a timely manner;
• Ensure subrecipients took timely corrective action on deficiencies identified in the audits.
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Public Instruction did not make subrecipients aware of all required grant award information for the Special Education Cluster, Title 1, Supporting Effective Instruction, Child and Adult Care Food Program, and Education Stabilization Fund.
CRITERIA
2 CFR 200.332 requires pass-through entities to communicate specific required information to subrecipients.
Required information includes:
- Subrecipients name (Must match the name associated with its unique entity identifier)
- Subrecipients unique entity identifier
- Federal award identification number (FAIN)
- Federal award date
- Subaward period of performance start and end date
- Amount of Federal funds obligated in the subaward
- Total amount of Federal funds obligated to the subrecipient by the pass-through entity, including the current financial obligation
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
- Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA)
- Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity
- Assistance listings title and number; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance listings number at the time of disbursement
- Identification of whether the Federal award is for research and development
- Indirect cost rate for the Federal award (including if the de minimis rate is used)
- All requirements of the subaward, including requirements imposed by federal statutes, regulations, and the terms and condition of the Federal award
2 CFR 200.303 requires non-Federal entities, in part, 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.
CAUSE
Not all grant agreement requirements were entered into the grant award template.
EFFECT
Subrecipients may not have been aware of all necessary grant information and requirements.
CONTEXT
The number of grant agreements during the audit period is listed below.
A. Special Education Cluster - 134 awards - 14 tested with 10 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
B. Title I program - 276 awards - 25 tested with 16 errors noted
The following criteria were missing or incorrect:
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
C. Supporting Effective Instruction - 278 awards - 25 tested with 21 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- Federal award date
- Federal award Identification Number (FAIN)
- Total amount of the Federal award committed to the subrecipient by the pass-through entity
D. Child and Adult Care Food Program - 134 awards - 14 tested with 2 errors noted
The following criteria were missing or incorrect:
- Subrecipients unique entity identifier
- 1 subrecipient did not have a grant contract
E. Education Stabilization Fund - 641 awards - 40 tested with 10 errors noted
The following criteria were missing or incorrect:
- Subrecipient name (1 sample did not have the correct subrecipient name on the grant award)
- Subrecipients unique entity identifier (2 did not match the Subrecipient name on grant award)
- Federal award date (8 awards did not have this)
- Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity (6 awards did not include Name of Federal Awarding Agency (Dept of Education) on grant award)
Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-024 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Instruction update its grant award templates to ensure that subrecipients are made award of all required grant award information
DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE
The Department of Public Instruction agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
Quarterly Project and Expenditure Reports tested did not accurately report key line items for each project.
CRITERIA
Coronavirus Capital Projects Fund Compliance and Reporting Guidance For States, Territories, and Freely Associated States (published December 2022) indicates that expenditures may be reported on a cash or accrual basis as long as the methodology is disclosed and is consistently applied. Project and Expenditure Reports must incorporate the definition of expenditures pursuant to 2 CFR 200.1. Recipients must maintain accounting records for compiling and reporting accurate financial data in accordance with appropriate accounting standards and principles. The guidance also defines "Obligations" as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. In addition, for Multipurpose Community Facility Projects, recipients are required to report, for each project, current period obligations, cumulative obligations, current period expenditures, and cumulative expenditures; as well as total square footage funded by CPF dollars (planned/actual). Lastly, the guidance allows edits or changes to be reflected in the next available report.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Per GAO Standards for Internal Control in Federal Government, Information and Communication, Principle 13 - Use of Quality Information, Attribute 13.04, management should obtain relevant data from reliable internal and external sources in a timely manner based on the identified information requirements.
CAUSE
Career and Technical Education did not consistently utilize accounting records for compiling Project and Expenditure Report data in accordance with appropriate accounting standards and principles. The tracking spreadsheet used to prepare the reports lacked a consistent basis of accounting for tracking payments since certain dates reflected in the spreadsheet did not agree to the state's accounting system (PeopleSoft) posted dates. Lastly, Career and Technical Education was unaware of the definition of an "obligation" until it was brought up during the Single Audit.
EFFECT
Inaccurate Project and Expenditure Reports limit the Treasury's ability to effectively track and monitor the use of the Coronavirus Capital Projects Fund for approved projects. In addition, inaccurate Project and Expenditures Reports also impacts the accuracy of program reporting for public transparency purposes.
CONTEXT
The Career and Technical Education entered into grant agreements with subrecipients on March 17, 2022, that obligated the initial CPF appropriation of $68,276,228 for multipurpose community facility projects. These grant agreements were subsequently amended in March 2024 to allocate $6,319,473 of CPF initially appropriated for broadband projects.
We tested the Project and Expenditure Reports which covered the periods January 1, 2024, to March 31, 2024, and April 1, 2024, to June 30, 2024. For the covered period January 1, 2024, to March 31, 2024, current period obligations were overstated by $9,272,777, cumulative obligations were understated by $36,987,052, current period expenditures were incorrectly reported for 5 out of 19 projects (in total, current period expenditures were understated by $124,881 using the cash basis) and cumulative expenditures were incorrectly reported for 7 out of 19 projects (in total, cumulative expenditures were overstated by $143,376 using the cash basis). For the covered period April 1, 2024, to June 30, 2024, current period obligations were overstated by $10,308,528, cumulative obligation amounts were corrected based on discussions with the auditor, current period expenditures were incorrectly reported for 8 out of 19 projects (in total, current period expenditures were overstated by $1,639,438 using the cash basis), and cumulative expenditures were incorrectly reported for 9 out of 19 projects (in total, cumulative expenditures were overstated by $2,223,450 using the cash basis or understated by $737,558 using the accrual basis). Lastly, it appeared total square footage reported (planned and actual) included square footage funded by all funding sources and not the square footage funded solely by CPF. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Career and Technical Education establish a consistent methodology for compiling and reporting financial data that is in accordance with appropriate accounting standards and principles. We also recommend the Career and Technical Education comply with Project and Expenditure Report guidance for reporting obligations, expenditures, and total square footage funded by Capital Project Fund dollars, including making any necessary edits and changes in the next available report.
CAREER AND TECHNICAL EDUCATION RESPONSE
The Department agrees with this recommendation
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Career and Technical Education is not verifying every subrecipient is audited and reviewing audit findings as required by 2 CFR 200, Subpart F. Subsequently, by not verifying every subrecipient is audited, Career and Technical Education is not ensuring their responsibilities for issuing management decisions are performed, if any findings are identified in the audits.
CRITERIA
All pass-through entities 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 terms and conditions of the subaward, and that the subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include, in part, following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward; issuing a management decision for applicable audit findings pertaining only to the federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521; and ensuring audit findings specifically related to the subaward are resolved (2 CFR 200.332(d)).
• Verify that every subrecipient is audited as required by 2 CFR 200, Subpart F, when it is expected that the subrecipient's Federal award expended during the respective fiscal year equaled or exceeded the $750,000 threshold set forth in 2 CFR 200.501 (2 CFR 200.332(f).
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
Career and Technical Education has not established processes to identify which subrecipients are subject to required audits or to obtain and review Uniform Guidance Single Audit reports. In addition, Career and Technical Education has not developed a tracking system to ensure timely submission of required audit reports and to ensure timely and appropriate corrective action is taken on all deficiencies.
EFFECT
Subrecipient noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward, including audit findings pertaining to the Federal award, may go undetected and unresolved.
CONTEXT
Career and Technical Education awarded subawards, individually up to $10 million, to 13 subrecipients totaling $74.6 million for 19 different multi-purpose community facility projects. Career and Technical Education has had prior experience with these subrecipients. Projects were included in the state’s program plan that was reviewed and approved by U.S. Treasury. Career and Technical Education imposed specific subaward conditions upon each subrecipient requiring payments as reimbursements rather than advance payments. Career and Technical Education performs ongoing monitoring procedures through review and approval of subrecipient requests for reimbursements, which includes reviewing invoices and contractor progress billings for unallowable expenses, prior to disbursing Capital Project Funds. Lastly, Career and Technical Education conducts annual on-site visits of started projects until completed to visually inspect projects are being completed as planned. Where sampling was performed, the audit used a non-statistical sampling method.
This finding, in combination with the finding regarding required communication of award information to the subrecipients (Finding 2024-04), results in a modified opinion for the subrecipient monitoring compliance requirement.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend Career and Technical Education establish processes to identify which subrecipients are subject to required audits and to obtain and review Uniform Guidance Single Audit reports, including developing a tracking system to ensure timely submission of required audit reports and timely and appropriate corrective action is taken on all deficiencies.
We also recommend Career and Technical Education verify every subrecipient is audited as required by 2 CFR 200, Subpart F; follow-up and ensure that subrecipients take timely and appropriate action on all deficiencies of the Federal award; and issue management decisions and ensure audit findings have been resolved.
CAREER AND TECHNICAL EDUCATION RESPONSE
The Department agrees with this recommendation
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Career and Technical Education did not ensure all required information was provided to subrecipients provided Coronavirus Capital Project Funds CPF). In addition, the pass-through entity's internal controls were insufficient to ensure that subrecipients received communication regarding the necessary items. Required information not communicated included:
• Subrecipient's name did not always match the name associated with its unique entity identifier obtained from SAM.gov;
• Subrecipient's unique entity identifier;
• Federal Award Identification Number;
• Federal Award date;
• Subaward Period of Performance Start and End Date;
• Amounts of the Federal Funds obligated, committed, and in total to the subrecipient by the pass-through entity were not clearly identifiable between Coronavirus Capital Projects Fund and Coronavirus State and Local Fiscal Recovery Funds;
• Assistance Listing Number; and,
• Reference of requirement for auditor access to the subrecipient's records and financial statements.
CRITERIA
Federal regulation, 2 CFR 200.332(a), requires pass-through entities to communicate specific required information to subrecipients.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
Career and Technical Education worked with the Attorney General's Office to develop a standard template for agreements with subrecipients. However, Career and Technical Education did not ensure all required communications applicable to Federal awards were included in the standard template.
EFFECT
These required communications are required to help subrecipients meet all their reporting requirements, and to meet all award terms. Subrecipients subject to Single Audits also need this information for their audits.
CONTEXT
Career and Technical Education awarded Capital Project Fund subawards, individually up to $10 million, to 13 subrecipients totaling $74.6 million for 19 different multi-purpose community facility projects. Four subaward agreements were tested and all did not include the required information identified in the condition of this finding.
In addition, three subrecipients received $6,666,667 for the projects from the State and Local Fiscal Recovery Fund. Career and Technical Education only entered into one grant agreement, which commingled Capital Project Funds and State and Local Fiscal Recovery Funds, with three of the 13 subrecipients. One of the three subrecipients that received both Capital Project Funds and State and Local Fiscal Recovery Funds had its fiscal year 2023 Single Audit on the Federal Audit Clearinghouse. This subrecipient incorrectly reported all $10 million as Capital Project Funds (ALN 21.029) on its Schedule of Expenditures of Federal Awards when only $3,333,333 should have been reported under ALN 21.029. Where sampling was performed, the audit used a non-statistical sampling method.
This finding, in combination with the finding regarding required audits (Finding 2024-03), results in a modified opinion for the subrecipient monitoring compliance requirement.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend Career and Technical Education:
• Communicate all required information of 2 CFR 200.332(b) to subrecipients;
• Develop procedures to ensure grant agreement templates are updated and that all Coronavirus Capital Projects Fund award information is communicated to subrecipients; and,
• Reissue grant agreements to outline the required information.
CAREER AND TECHNICAL EDUCATION RESPONSE
The Department agrees with this recommendation
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services (DHHS) charged WIC special formula distribution center food outlay costs to the wrong Federal fiscal year.
CRITERIA
Federal regulation, 2 CFR 200.403(h), states, in part, in order to be allowable under Federal awards, costs must be incurred during the approved budget period.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
The Department of Health and Human Services does not have a procedure to ensure special formula distribution center food outlays are applied to the correct Federal fiscal year.
EFFECT
The WIC special formula distribution center food outlay costs charged to the wrong Federal fiscal year resulted in unallowable costs to the Federal fiscal year in which they were charged since the costs were outside of the period of performance for grant. This also impacted the accuracy of Federal fiscal year expenses reported to USDA Food and Nutrition Services.
CONTEXT
State agencies can only charge allowable costs for obligations incurred during the grant's period of performance. The WIC grant is available for one year, October 1 through September 30, and only obligations incurred during that period can be charged to the grant. The Department of Health and Human Services incurred costs in August 2022 for FFY 2022 for special formula distribution center food outlays that were paid in February 2023 and charged to FFY 2023.
A random sample test identified a known error amount is $15,451 with likely projected questioned costs of $71,642. Twenty-six special formula distribution center payments were made during the audit period totaling $604,441. Aside from the projection and based on support provided by DHHS, eight special formula distribution center payments, in addition to the known error from sample testing, totaling $198,289, are likely charged to the incorrect Federal fiscal year. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services establish procedures to ensure WIC special formula distribution center food outlay costs are charged to the proper Federal fiscal year. We also recommend the Department of Health and Human Services work with U.S. Food and Nutrition Services to complete a post closeout adjustment to accurately reflect expenses within the correct Federal fiscal years.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Health and Human Services (DHHS) charged WIC special formula distribution center food outlay costs to the wrong Federal fiscal year.
CRITERIA
Federal regulation, 2 CFR 200.403(h), states, in part, in order to be allowable under Federal awards, costs must be incurred during the approved budget period.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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.
CAUSE
The Department of Health and Human Services does not have a procedure to ensure special formula distribution center food outlays are applied to the correct Federal fiscal year.
EFFECT
The WIC special formula distribution center food outlay costs charged to the wrong Federal fiscal year resulted in unallowable costs to the Federal fiscal year in which they were charged since the costs were outside of the period of performance for grant. This also impacted the accuracy of Federal fiscal year expenses reported to USDA Food and Nutrition Services.
CONTEXT
State agencies can only charge allowable costs for obligations incurred during the grant's period of performance. The WIC grant is available for one year, October 1 through September 30, and only obligations incurred during that period can be charged to the grant. The Department of Health and Human Services incurred costs in August 2022 for FFY 2022 for special formula distribution center food outlays that were paid in February 2023 and charged to FFY 2023.
A random sample test identified a known error amount is $15,451 with likely projected questioned costs of $71,642. Twenty-six special formula distribution center payments were made during the audit period totaling $604,441. Aside from the projection and based on support provided by DHHS, eight special formula distribution center payments, in addition to the known error from sample testing, totaling $198,289, are likely charged to the incorrect Federal fiscal year. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services establish procedures to ensure WIC special formula distribution center food outlay costs are charged to the proper Federal fiscal year. We also recommend the Department of Health and Human Services work with U.S. Food and Nutrition Services to complete a post closeout adjustment to accurately reflect expenses within the correct Federal fiscal years.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services, Emergency Rental Assistance (ERA) program, bypassed its two tier review process used for determining program eligibility and the approved funding decision amount that is paid to ERA recipients. Approximately 10% of all ERA payments during the audit period, totaling approximately $8.2 million, were paid from eligibility determinations where the two tier review was bypassed.
CRITERIA
• 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
• DHHS's ERA Policies & Procedures outlines its Tier 1 and Tier 2 reviews for its ERA application eligibility process.
CAUSE
The Department of Health and Human Services, Emergency Rental Assistance (ERA) program, did not require its two tier review of ERA applications and assistance amounts during the entirety of the audit period. The program experienced significant influxes of applications at various times during the audit period which caused a backlog on application processing. To help ensure individuals applying for assistance weren't excessively delayed, the program decided to bypass its two tier review process of eligibility and funding decision amount to alleviate backlog more quickly.
EFFECT
The Department determined applicant program eligibility and made assistance payments through a single reviewer process resulting in a higher risk of both program ineligibility and inaccurate payment amounts. While no eligibility errors were identified through compliance testing, the bypass of its two tier review process created a control environment inadequate to reduce the risk of eligibility related errors. It was noted that Federal ERA FAQ Guidance states that, "grantees are encouraged to rely on a household's self-attestations for purposes of confirming eligibility" (FAQ 1) and "the grantee may rely on a self-attestation of household income without further verification if the applicant confirms in their application or other document that they are unable to provide documentation of their income" (FAQ 4).
CONTEXT
During the audit period, the program paid over $85 million of Federal ERA assistance to those with housing instability or risk of homelessness. Approximately $8.2 million of these payments did not go through the program's two tier eligibility review process. This translates to 7,853 out of the 94,172 payment numbers during the audit period having the same reviewer for both tier 1 and tier 2 review.
The State Auditor's Office performed eligibility testing of 60 applications and the associated assistance payments and did not identify any eligibility errors. More specifically, 20 of the 60 tested were from the applications with the same reviewer for both tier 1 and tier 2 review. While the 20 had the same reviewer for both tiers of review, no errors were identified in the testing of eligibility. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services follow its ERA program policies and procedures surrounding its two tier eligibility review process to ensure the control environment reduces the risk of eligibility determination related errors and associated funding decision errors.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services, Homeowner's Assistance Fund (HAF) program, made assistance payments in excess of the supported payment amounts. More specifically, 2 of the 60 eligibility payments reviewed resulted in actual overpayments of $14,993 and additional likely questioned costs of $317,445 when projected to the entire population. One of these errors was identified from a population of applications that had two separate reviewers during application and funding amount processing while the other error was derived from the population that had the same reviewer for the application and funding amount decision processing.
CRITERIA
• 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
• 2 CFR 200.302(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
• DHHS's HAF Policies & Procedures outlines its Tier 1 and Tier 2 reviews for its HAF application eligibility process.
CAUSE
The Department of Health and Human Services, Homeowner's Assistance Fund (HAF) program, did not have procedures in place to ensure assistance payments did not exceed the amounts on supporting documentation provided by the recipient.
EFFECT
The Department issued assistance payments for amounts greater than the underlying support for two unique households.
CONTEXT
During the audit period, the program paid over $32 million of Federal HAF assistance to citizens of North Dakota. Approximately $1.75 million of these payments did not go through the program's two tier eligibility review process. This translates to 1,323 out of the 34,432 payments during the audit period having the same reviewer for both tier 1 and tier 2 review.
The State Auditor's Office performed eligibility testing of 60 applications with 20 of the 60 being from the applications that had the same reviewer for both tier 1 and tier 2 review and 40 being from applications with different reviewers for tier 1 and tier 2 review. From the 20 applications and associated payments with the same reviewer, one overpayment of $2,993.82 was identified which projected to $11,953.30. From the 40 applications with different reviewers, one overpayment of $12,000 was noted which projected to $320,485.56. In aggregate, these errors totaled $14,993.82 with an additional likely questioned cost of $317,445. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services implement procedures and ensure the funding decision and payment amounts are supported by the applicant provided documentation. Additionally, we recommend the Department ensure the improper payments are recouped through the HAF program's refunding process.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Department of Human Services made payments under the Vocational Rehabilitation program outside of the 2021 and 2022 grant award periods of performance which was 10/1/20 - 9/30/21, and 10/1/21-9/30/22 with an allowable liquidation period, to pay for obligations, through 12/31/2022 and 12/31/2023, respectively. Payments made after the liquidation period totaled $1,495.35 for the 2021 grant. Payments obligated after the obligation period totaled $23,340 for the 2021 grant and $7,156 for the 2022 grant.
CRITERIA
The following criteria requires federal funds to be obligated by the end of the two-year period of performance window and those obligations must be liquidated within 90 days after the end date of period of performance.
2 CFR 200.343 requires:
" Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award.
34 CFR 361.64 requires:
" (a) Except as provided in paragraph (b) of this section, any Federal funds, including reallotted funds, that are appropriated for a fiscal year to carry out a program under this part that are not obligated by the State by the beginning of the succeeding fiscal year and any program income received during a fiscal year that is not obligated by the State by the beginning of the succeeding fiscal year remain available for obligation by the State during that succeeding fiscal year.
(b) Federal funds appropriated for a fiscal year remain available for obligation in the succeeding fiscal year only to the extent that the State met the matching requirement for those Federal funds by obligating, in accordance with 34 CFR 76.707, the non-Federal share in the fiscal year for which the funds were appropriated."
The following criteria pertains to the establishment and maintenance of effective internal control to ensure payments are made within the correct period of performance.
45 CFR 75.303 states the non-Federal entity must, "establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award."
CAUSE
The Department of Health and Human Services (DHHS), Vocational Rehabilitation Program, allowed payments to universities for tuition to be charged during the federal grant prior to the period when the service was provided. This issue was noted in three of five errors found in sampling and affected both the FFY 2021 and FFY 2022 grants. The remaining two errors were a result of expenditures being assigned improper coding which was not identified during the regular period of performance reviews performed by DHHS. The first occurred prior to the implementation of the period of performance reviews and the second was an expenditure to another state agency that was evaluated by the agency's review using the date of the check rather than the dates on the invoice.
EFFECT
Known unallowable costs totaling $30,496. were charged to the grants due to being obligated or liquidated after the period of performance. When projected to the population, an additional $50,372 in errors are likely.
CONTEXT
The Department of Health and Human Services had 395 payments totaling $514,546 after the period of performance for the FFY2021 and FY2022 federal grants. Of this amount, $26,367 were tuition fee payments determined to be the total population of known questioned costs related to tuition fees. $36,969 of the remaining population were sampled and $4,128 were errors. These errors projected to $54,401. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-021 was reported in the immediate prior year. Findings 2020-019, 2018-031, and 2016-053 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Health and Human Services improve procedures to review transactions for period of performance corrections to prevent and detect payments from being charged to the Vocational Rehabilitation program outside the period of performance.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Department of Health and Human Services made payments under the Temporary Assistance for Needy Families program and recorded the payments to an incorrect grant year. The expenditures were incurred prior to the start of the period of performance of the grants. Of the errors found $40,420 was incorrectly charged to federal fiscal year 2023 grant and $37,702 was incorrectly charged to the federal fiscal year 2024 grant without obtaining federal approval.
CRITERIA
45 CFR 75.309 states that a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the HHS awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
The Department of Health and Human Services, Temporary Assistance for Needy Families, incorrectly interpreted the period of performance requirements and the start date for each grant award.
EFFECT
Costs totaling $78,113 were charged to the incorrect grant award.
CONTEXT
The Department of Health and Human Services, Temporary Assistance for Needy Families program, had non-benefit expenditures of $3,887,368 through 235 vouchers. 2 of the 24 vouchers that were sampled were found to be paid from an incorrect grant year which resulted in known questioned costs of $78,113 and, when projected to the population, additional likely questioned costs of $182,730. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Health and Human Services follow period of performance time frames when paying expenditures under grant awards and, if paying expenditures prior to the start of the grant award, federal approval is obtained.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Due to a transposition error in DHHS's fiscal office a payment was approved that was incorrect and was not supported by proper documentation. This resulted in a known questioned cost of $29,000. When projected to the population, additional likely questioned costs of $160,247 were calculated.
For the month of January 2024, a foster parent of three unaccompanied refugee minors should have received a payment for $3,255 based on foster care rates and how many days of January in placement. The payment amount was transposed, and payment was incorrectly made for $32,255 to the foster parent. Prior to this error, the foster parent received $3,000-$3,800 per month from the program. Following this error payments decreased due to one child leaving the program and the foster parent received $2,100 to $2,500 per month from the program. The foster parent stopped participating in the unaccompanied refugee minor program after the minors in their care were reunited with relatives, therefore leaving the program.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
45 CFR 400.49 states the State agency or its designee agency(s) must maintain a procedure to ensure recovery of overpayments and correction of underpayments in the Refugee Cash Assistance (RCA) program.
45 CFR 400.112 states Foster care maintenance payments must be provided under a State's program under title IV-E of the Social Security Act if a child is eligible under that program.
CAUSE
Payment was entered incorrectly into the states accounting system and the error was not detected during the manual review process. Also, the unaccompanied refugee minors' program coordinator was not contacted by the foster parent regarding the overpayment.
EFFECT
Overpayments were made to foster parents receiving unaccompanied refugee minors' funds.
CONTEXT
There were 529 unaccompanied minor foster payments that occurred during our audit period of July 1, 2022, through June 30, 2024, for a total of $799,439. The audit selected a random sample of seven of 28 unaccompanied minors and tested 95 payments to the foster parents of these minors. The audit identified one known error in the amount of $29,000. When projected to the population, additional likely questioned costs of $160,247 were calculated. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Medicaid program integrity unit within DHHS is not independent from other Medicaid operations. The program integrity unit has system access that allows the unit to process and adjudicate Medicaid claims within the Medicaid Management Information System (MMIS).
The audit compared claims by User IDs creating and last editing the claims to the employees by name within the program integrity unit. A review of access of MMIS identified 3 members of the program integrity unit with access within MMIS to process (submit, validate, edit, and override) claims during the audit period of July 1, 2022, through June 30, 2024. The audit did not identify any transactions where the 3 employees either created or last edited claims.
CRITERIA
The GAO Greenbook Principle 11.14 states "Management designs control activities to limit user access to information technology through authorization control activities such as providing a unique user identification or token to authorized users. These control activities may restrict authorized users to the applications or functions commensurate with their assigned responsibilities, supporting an appropriate segregation of duties."
The GAO Greenbook Principle 10.03 states “Management divides or segregates key duties and responsibilities among different people to reduce the risk of error, misuse, or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event.”
Per DHHS' security plan for MMIS "The organization employs the concept of least privilege, allowing only authorized accesses for users (and processes acting on behalf of users) which are necessary to accomplish assigned tasks in accordance with missions and business functions."
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
Members of the program integrity unit are given access within MMIS that allows them to adjudicate and process claims.
EFFECT
There is a risk of self-review that the program integrity employee may review providers related to or actual claims that the same employee previously processed or adjudicated.
CONTEXT
42 CFR 456.2 requires "The Medicaid agency must implement a statewide surveillance and utilization control program that safeguards against unnecessary or inappropriate use of Medicaid services and against excess payments." The program integrity unit is the team responsible for performing utilization reviews and other audits of claims and providers within the Medicaid program. During this period there were 12,228,253 claims and over $2 billion Medicaid expenditures reported on the 2023 and 2024 SEFAs. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that DHHS restrict access of the program integrity unit employees within MMIS from processing and adjudicating claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services disagrees with the finding. The federal regulations do not explicitly mandate the separation of duties between employees conducting audits and those processing claims. While 42 CFR 456.2 requires Medicaid agencies to implement a surveillance and utilization control program, it does not specifically require the segregation of these roles. The regulation promotes control measures but does not mandate a distinct separation of duties.
Based on this, we do not support this recommendation, as it exceeds the requirements outlined in the applicable federal rules. HHS remains committed to maintaining strong internal controls and believe our current structure aligns with regulatory expectations.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the audit did not identify noncompliance due to the lack of segregation of duties, this doesn’t remove the requirement of 45 CFR 75.303 to have proper internal controls and the guidance of the GAO Greenbook. This includes separating the responsibilities for authorizing, processing and recording, and reviewing the transactions.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
Providers did not submit proper documentation or incorrectly billed the number of units provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 12 of the total 570 claims tested by the auditors. The error in 1 claim did not have a financial impact. The remaining errors resulted in improper payments totaling $16,150.19. When projected to the entire population, the additional likely federal questioned costs totaled $22,320,252.
The errors by program are as follows:
There were 9 errors found in 480 Medicaid claims tested with known improper payments of $15,001.29 which resulted in additional likely federal questioned costs of $22,213,214 when projected to the entire population. There were 2 errors found in 90 CHIP claims tested with known improper payments of $1,148.90 which resulted in $107,038 additional likely federal questioned costs when projected to the entire population.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests or providers submitted documentation that didn't support their billed units.
EFFECT
Unallowable or inaccurate payments were made to providers who did not submit proper documentation, or who submitted claims that did not match the number of service units provided as evidenced by their documentation when selected for audit.
CONTEXT
There were 12,228,253 Medicaid claims and 374,561 CHIP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-008 was reported in the immediate prior year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Medicaid program integrity unit within DHHS is not independent from other Medicaid operations. The program integrity unit has system access that allows the unit to process and adjudicate Medicaid claims within the Medicaid Management Information System (MMIS).
The audit compared claims by User IDs creating and last editing the claims to the employees by name within the program integrity unit. A review of access of MMIS identified 3 members of the program integrity unit with access within MMIS to process (submit, validate, edit, and override) claims during the audit period of July 1, 2022, through June 30, 2024. The audit did not identify any transactions where the 3 employees either created or last edited claims.
CRITERIA
The GAO Greenbook Principle 11.14 states "Management designs control activities to limit user access to information technology through authorization control activities such as providing a unique user identification or token to authorized users. These control activities may restrict authorized users to the applications or functions commensurate with their assigned responsibilities, supporting an appropriate segregation of duties."
The GAO Greenbook Principle 10.03 states “Management divides or segregates key duties and responsibilities among different people to reduce the risk of error, misuse, or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event.”
Per DHHS' security plan for MMIS "The organization employs the concept of least privilege, allowing only authorized accesses for users (and processes acting on behalf of users) which are necessary to accomplish assigned tasks in accordance with missions and business functions."
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
Members of the program integrity unit are given access within MMIS that allows them to adjudicate and process claims.
EFFECT
There is a risk of self-review that the program integrity employee may review providers related to or actual claims that the same employee previously processed or adjudicated.
CONTEXT
42 CFR 456.2 requires "The Medicaid agency must implement a statewide surveillance and utilization control program that safeguards against unnecessary or inappropriate use of Medicaid services and against excess payments." The program integrity unit is the team responsible for performing utilization reviews and other audits of claims and providers within the Medicaid program. During this period there were 12,228,253 claims and over $2 billion Medicaid expenditures reported on the 2023 and 2024 SEFAs. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that DHHS restrict access of the program integrity unit employees within MMIS from processing and adjudicating claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services disagrees with the finding. The federal regulations do not explicitly mandate the separation of duties between employees conducting audits and those processing claims. While 42 CFR 456.2 requires Medicaid agencies to implement a surveillance and utilization control program, it does not specifically require the segregation of these roles. The regulation promotes control measures but does not mandate a distinct separation of duties.
Based on this, we do not support this recommendation, as it exceeds the requirements outlined in the applicable federal rules. HHS remains committed to maintaining strong internal controls and believe our current structure aligns with regulatory expectations.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the audit did not identify noncompliance due to the lack of segregation of duties, this doesn’t remove the requirement of 45 CFR 75.303 to have proper internal controls and the guidance of the GAO Greenbook. This includes separating the responsibilities for authorizing, processing and recording, and reviewing the transactions.
CONDITION
The Medicaid program integrity unit within DHHS is not independent from other Medicaid operations. The program integrity unit has system access that allows the unit to process and adjudicate Medicaid claims within the Medicaid Management Information System (MMIS).
The audit compared claims by User IDs creating and last editing the claims to the employees by name within the program integrity unit. A review of access of MMIS identified 3 members of the program integrity unit with access within MMIS to process (submit, validate, edit, and override) claims during the audit period of July 1, 2022, through June 30, 2024. The audit did not identify any transactions where the 3 employees either created or last edited claims.
CRITERIA
The GAO Greenbook Principle 11.14 states "Management designs control activities to limit user access to information technology through authorization control activities such as providing a unique user identification or token to authorized users. These control activities may restrict authorized users to the applications or functions commensurate with their assigned responsibilities, supporting an appropriate segregation of duties."
The GAO Greenbook Principle 10.03 states “Management divides or segregates key duties and responsibilities among different people to reduce the risk of error, misuse, or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event.”
Per DHHS' security plan for MMIS "The organization employs the concept of least privilege, allowing only authorized accesses for users (and processes acting on behalf of users) which are necessary to accomplish assigned tasks in accordance with missions and business functions."
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
Members of the program integrity unit are given access within MMIS that allows them to adjudicate and process claims.
EFFECT
There is a risk of self-review that the program integrity employee may review providers related to or actual claims that the same employee previously processed or adjudicated.
CONTEXT
42 CFR 456.2 requires "The Medicaid agency must implement a statewide surveillance and utilization control program that safeguards against unnecessary or inappropriate use of Medicaid services and against excess payments." The program integrity unit is the team responsible for performing utilization reviews and other audits of claims and providers within the Medicaid program. During this period there were 12,228,253 claims and over $2 billion Medicaid expenditures reported on the 2023 and 2024 SEFAs. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that DHHS restrict access of the program integrity unit employees within MMIS from processing and adjudicating claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services disagrees with the finding. The federal regulations do not explicitly mandate the separation of duties between employees conducting audits and those processing claims. While 42 CFR 456.2 requires Medicaid agencies to implement a surveillance and utilization control program, it does not specifically require the segregation of these roles. The regulation promotes control measures but does not mandate a distinct separation of duties.
Based on this, we do not support this recommendation, as it exceeds the requirements outlined in the applicable federal rules. HHS remains committed to maintaining strong internal controls and believe our current structure aligns with regulatory expectations.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the audit did not identify noncompliance due to the lack of segregation of duties, this doesn’t remove the requirement of 45 CFR 75.303 to have proper internal controls and the guidance of the GAO Greenbook. This includes separating the responsibilities for authorizing, processing and recording, and reviewing the transactions.
CONDITION
Providers did not submit proper documentation for care provided to individuals. The audit requested supporting documentation for tested claims from the providers and found errors in 1 of the total 25 claims tested by the auditors.
The error resulted in an improper payment totaling $176. When projected to the entire population, the additional likely federal questioned costs totaled $281,698.
CRITERIA
45 CFR 75.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Money Follows the Person (MFP) is a federally funded Medicaid program.
• 42 CFR 431.960 (c) (1) states a medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider's medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State's written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
• 42 CFR 431.960 (c) (3) states medical review errors include, but are not limited to, the following: (i) lack of documentation, (ii) insufficient documentation, and (iii) procedure coding errors.
CAUSE
DHHS was not able to obtain the required documentation after multiple requests.
EFFECT
An unallowable payment was made to the provider who did not submit proper documentation when selected for audit.
CONTEXT
There were 28,533 MFP claims that occurred during our audit period of July 1, 2022, through June 30, 2024. The federal portion of the projected likely questioned costs was calculated by using the average federal matching rate for claims paid during the period of the claim. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Department of Human Services develop a corrective action plan to address the errors identified in the audit and recover payments made on unsupported claims.
DEPARTMENT OF HEALTH AND HUMAN SERVICES RESPONSE
The Department of Health and Human Services agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The Division of Emergency Services did not correctly and timely report subawards on Federal Funding Accountability and Transparency Act (FFATA) reports. The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
The Division of Emergency Services corrected their procedures in March 2024 to report new subawards based on obligation amount. Expanded testing from USASpending.gov was performed to ensure that new subawards reported obligated subaward amounts. This test found that, while still untimely, all subawards with action dates from March 2024-June 2024 were properly reported with the obligated subaward amounts.
The auditors tested 37 subaward obligations. 26 obligations were selected based on payments made during the audit period. Due to the agency correcting their procedures, an additional 11 obligations were selected from USASpending.gov with subaward action dates after March 1, 2024. One of the 37 subawards, obligated for $15,888,022 in federal funds, was not reported at all for FFATA. Five of 37 tested subawards were reported for the payment amount rather than the obligation amount of the subaward. The errors in obligation amount for these five subawards netted to $1,490,193.12. 26 out of 37 tested subawards were not reported by the end of the month following the month of the obligation date. For context, 17 of the 26 errors were reported within 2 weeks after end of the month following the month of obligation. Other key data elements were correct for reported obligations.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
The subaward information is then available to the public on the USA Spending website for transparency.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards.
CONTEXT
During the audit period, the agency made payments on 308 subawards and 11 disasters. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Division of Emergency Services ensures timely and accurate submission of FFATA reports in accordance with federal regulations.
ADJUTANT GENERAL RESPONSE
The Adjutant General agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The Division of Emergency Services did not correctly and timely report subawards on Federal Funding Accountability and Transparency Act (FFATA) reports. The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
The Division of Emergency Services corrected their procedures in March 2024 to report new subawards based on obligation amount. Expanded testing from USASpending.gov was performed to ensure that new subawards reported obligated subaward amounts. This test found that, while still untimely, all subawards with action dates from March 2024-June 2024 were properly reported with the obligated subaward amounts.
The auditors tested 37 subaward obligations. 26 obligations were selected based on payments made during the audit period. Due to the agency correcting their procedures, an additional 11 obligations were selected from USASpending.gov with subaward action dates after March 1, 2024. One of the 37 subawards, obligated for $15,888,022 in federal funds, was not reported at all for FFATA. Five of 37 tested subawards were reported for the payment amount rather than the obligation amount of the subaward. The errors in obligation amount for these five subawards netted to $1,490,193.12. 26 out of 37 tested subawards were not reported by the end of the month following the month of the obligation date. For context, 17 of the 26 errors were reported within 2 weeks after end of the month following the month of obligation. Other key data elements were correct for reported obligations.
CRITERIA
Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made.
The subaward information is then available to the public on the USA Spending website for transparency.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
The FFATA reporting was made for payments over $30,000 at the end of every month rather than amounts obligated in that month.
EFFECT
Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards.
CONTEXT
During the audit period, the agency made payments on 308 subawards and 11 disasters. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend the Division of Emergency Services ensures timely and accurate submission of FFATA reports in accordance with federal regulations.
ADJUTANT GENERAL RESPONSE
The Adjutant General agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
We tested four infrastructure projects that used State and Local Fiscal Recovery Funds: one new construction project at Bismarck State College – Polytechnic Building, one renovation project at Minot State University – Hartnett Hall, and one new construction project and one renovation project at University of North Dakota - Airport Apron and Merrifield Hall, respectively. We noted three of the four infrastructure projects tested did not follow procurement rules for architect and Construction Management at-Risk (CMaR) services. We noted the following:
Bismarck State College - Polytechnic Building:
• The amount of the contract was $42,205,831 and questioned costs were $25,253,685.
• The CMaR selection committee was improperly composed as a registered engineer and a registered architect were unknown at the time of solicitation.
• The CMaR request for qualifications were improperly evaluated as a registered engineer and a registered architect did not evaluate the submittals.
Minot State University - Hartnett Hall:
• The amount of the contract was $23,738,195 and questioned costs were $22,575,329.
• Architect services were evaluated on a criteria item, understanding the project, which was not disclosed in the request for qualifications nor listed in N.D.C.C. There was no addendum issued.
• The CMaR selection committee was improperly composed after the request for qualifications was issued. A change was made to the selection committee which left it with no registered architect.
• The CMaR request for qualifications did not have all the required information in it; the number of persons to be included in the final list were not listed.
• The CMaR request for qualifications were improperly evaluated as a registered architect did not evaluate the submittals.
University of North Dakota - Merrifield Hall:
• The amount of the contract was $40,829,950 and questioned costs were $27,554,154.
• The CMaR selection committee was improperly composed as there was no registered engineer and the licensed contractor had an inactive license during part or all of their selection committee duties.
• The CMaR request for proposal did not have all the required information in it. The selection committee members were not listed, the evaluating criteria and relative weight of each were not listed, and the number of persons to be included in the final list were not listed.
• The CMaR request for proposals were improperly evaluated as a registered engineer did not evaluate the submittals, the licensed contractor had an inactive license during part or all of their selection committee duties – which includes evaluations, and the submittals were not evaluated on all of the required criteria – the person’s compliance with state and federal law was not evaluated.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
N.D.C.C. 54-44.7-03, subsection 5, states in part, the agency selection committee shall evaluate each of the persons or firms interviewed on the basis of the following criteria:
a. Past performance.
b. The ability of professional personnel.
c. Willingness to meet time and budget requirements.
d. Location, with higher priority given to firms headquartered in North Dakota.
e. Recent, current, and projected workloads of the persons or firms.
f. Related experience on similar projects.
g. Recent and current work for the agency
N.D.C.C. 48-01.2-20, subsection 1, states, A governing body electing to utilize a construction management at-risk delivery process for a proposed public improvement shall create a selection committee composed of:
a. An administrative individual from the governing body.
b. A registered architect.
c. A registered engineer.
d. A licensed contractor.
N.D.C.C. 48-01.2-20, subsection 3, lists fourteen items that must be established as content in the request for qualifications, which includes the listing of selection committee members, the evaluating criteria and relative weight of each, and the number of persons to be included in the final list.
N.D.C.C. 48-01.2-20, subsections 5 and 6, states that the selection committee needs to determine the appropriate evaluation criteria for the eight qualification criteria items listed. The selection committee shall evaluate each submission based on the qualification criteria items listed in subsection 5, which includes the person's compliance with state and federal law.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
Bismarck State College:
• There may have been a slight confusion of what and which duties the selection committee was required to perform.
Minot State University:
• They are unsure why the additional criteria was used to evaluate the architect request for qualifications.
• The selection committee changed after its initial composition leaving the selection committee with no registered architect.
• The number of persons to be included in the final list was inadvertently overlooked.
University of North Dakota:
• They thought that a registered engineer would fulfill the selection committee requirement; however, their registered engineer was registered in Nebraska not North Dakota. The licensed contractor had a lapse in an active license for all or part of their selection committee duties.
• The required information in the request for proposal and the proper evaluating criteria was an oversight.
EFFECT
By not following N.D.C.C. for the architect and CMaR services, these service contracts may have been awarded incorrectly.
CONTEXT
Bismarck State College, Minot State University and the University of North Dakota were allocated $35 million, $25 million, and $55 million, respectively, from the state fiscal recovery fund for specific renovation and construction projects. These institutions were allowed to enter into contracts to procure goods and services with only a subset of federal procurement requirements being applicable to this type of federal funding - recipients must adhere to the same policies and procedures they use for non-federal procurements. These three institutions were allocated a total $115 million from the state fiscal recovery fund and improperly awarded $106.8 million in contracts due to not adhering to procurement rules. $75.4 million was spent on these improperly awarded contracts during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that Bismarck State College, Minot State University and the University of North Dakota update their procedures to review and adhere to both the architect and Construction Management at-Risk selection processes to ensure compliance with the N.D.C.C. surrounding procurement for construction projects.
UNIVERSITY SYSTEM RESPONSE
Bismarck State College agrees with the recommendation.
Minot State University agrees with the recommendation.
University of North Dakota agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
We tested four infrastructure projects that used State and Local Fiscal Recovery Funds: one new construction project at Bismarck State College – Polytechnic Building, one renovation project at Minot State University – Hartnett Hall, and one new construction project and one renovation project at University of North Dakota - Airport Apron and Merrifield Hall, respectively. We noted three of the four infrastructure projects tested did not follow procurement rules for architect and Construction Management at-Risk (CMaR) services. We noted the following:
Bismarck State College - Polytechnic Building:
• The amount of the contract was $42,205,831 and questioned costs were $25,253,685.
• The CMaR selection committee was improperly composed as a registered engineer and a registered architect were unknown at the time of solicitation.
• The CMaR request for qualifications were improperly evaluated as a registered engineer and a registered architect did not evaluate the submittals.
Minot State University - Hartnett Hall:
• The amount of the contract was $23,738,195 and questioned costs were $22,575,329.
• Architect services were evaluated on a criteria item, understanding the project, which was not disclosed in the request for qualifications nor listed in N.D.C.C. There was no addendum issued.
• The CMaR selection committee was improperly composed after the request for qualifications was issued. A change was made to the selection committee which left it with no registered architect.
• The CMaR request for qualifications did not have all the required information in it; the number of persons to be included in the final list were not listed.
• The CMaR request for qualifications were improperly evaluated as a registered architect did not evaluate the submittals.
University of North Dakota - Merrifield Hall:
• The amount of the contract was $40,829,950 and questioned costs were $27,554,154.
• The CMaR selection committee was improperly composed as there was no registered engineer and the licensed contractor had an inactive license during part or all of their selection committee duties.
• The CMaR request for proposal did not have all the required information in it. The selection committee members were not listed, the evaluating criteria and relative weight of each were not listed, and the number of persons to be included in the final list were not listed.
• The CMaR request for proposals were improperly evaluated as a registered engineer did not evaluate the submittals, the licensed contractor had an inactive license during part or all of their selection committee duties – which includes evaluations, and the submittals were not evaluated on all of the required criteria – the person’s compliance with state and federal law was not evaluated.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
N.D.C.C. 54-44.7-03, subsection 5, states in part, the agency selection committee shall evaluate each of the persons or firms interviewed on the basis of the following criteria:
a. Past performance.
b. The ability of professional personnel.
c. Willingness to meet time and budget requirements.
d. Location, with higher priority given to firms headquartered in North Dakota.
e. Recent, current, and projected workloads of the persons or firms.
f. Related experience on similar projects.
g. Recent and current work for the agency
N.D.C.C. 48-01.2-20, subsection 1, states, A governing body electing to utilize a construction management at-risk delivery process for a proposed public improvement shall create a selection committee composed of:
a. An administrative individual from the governing body.
b. A registered architect.
c. A registered engineer.
d. A licensed contractor.
N.D.C.C. 48-01.2-20, subsection 3, lists fourteen items that must be established as content in the request for qualifications, which includes the listing of selection committee members, the evaluating criteria and relative weight of each, and the number of persons to be included in the final list.
N.D.C.C. 48-01.2-20, subsections 5 and 6, states that the selection committee needs to determine the appropriate evaluation criteria for the eight qualification criteria items listed. The selection committee shall evaluate each submission based on the qualification criteria items listed in subsection 5, which includes the person's compliance with state and federal law.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
Bismarck State College:
• There may have been a slight confusion of what and which duties the selection committee was required to perform.
Minot State University:
• They are unsure why the additional criteria was used to evaluate the architect request for qualifications.
• The selection committee changed after its initial composition leaving the selection committee with no registered architect.
• The number of persons to be included in the final list was inadvertently overlooked.
University of North Dakota:
• They thought that a registered engineer would fulfill the selection committee requirement; however, their registered engineer was registered in Nebraska not North Dakota. The licensed contractor had a lapse in an active license for all or part of their selection committee duties.
• The required information in the request for proposal and the proper evaluating criteria was an oversight.
EFFECT
By not following N.D.C.C. for the architect and CMaR services, these service contracts may have been awarded incorrectly.
CONTEXT
Bismarck State College, Minot State University and the University of North Dakota were allocated $35 million, $25 million, and $55 million, respectively, from the state fiscal recovery fund for specific renovation and construction projects. These institutions were allowed to enter into contracts to procure goods and services with only a subset of federal procurement requirements being applicable to this type of federal funding - recipients must adhere to the same policies and procedures they use for non-federal procurements. These three institutions were allocated a total $115 million from the state fiscal recovery fund and improperly awarded $106.8 million in contracts due to not adhering to procurement rules. $75.4 million was spent on these improperly awarded contracts during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that Bismarck State College, Minot State University and the University of North Dakota update their procedures to review and adhere to both the architect and Construction Management at-Risk selection processes to ensure compliance with the N.D.C.C. surrounding procurement for construction projects.
UNIVERSITY SYSTEM RESPONSE
Bismarck State College agrees with the recommendation.
Minot State University agrees with the recommendation.
University of North Dakota agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
The University of North Dakota has federally funded equipment that is not being properly identified with the corresponding major equipment asset tags on the asset. We tested a total of 21 capital assets and 10 of those were at the University of North Dakota where we found 5 assets without any major equipment identification tags on them for an error rate of 50%.
CRITERIA
2 CFR section 200.313(d)(3) states in part that a control system must be in place to ensure safeguards for preventing property loss, damage, or theft.
2 CFR section 200.313(b) states in part that a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures.
The University of North Dakota Capital Asset policy states in part that the campus department is responsible for using correct chart field when acquiring all assets, tagging and tracking their major equipment, and completing annual inventory of all major equipment.
CAUSE
The departments and/or principal investigator (PI) purchasing the equipment did not correctly attach the major equipment tags to the asset as required by the University of North Dakota's Capital Asset policy.
EFFECT
There is noncompliance with federal rules and regulations as well as the University of North Dakota's Capital Asset policy, thus increasing the risk that federally funded equipment is not properly identified.
CONTEXT
For the audit period, the Research and Development Cluster had 207 equipment asset additions ($9,958,360). All the issues noted originated from one single department at the University of North Dakota. The insufficient tagging of capital asset deviations seems to be an isolated incident contained to this department, which in total for our audit period had 16 new additions totaling $419,060. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota ensure federally funded equipment is properly tagged.
UNIVERSITY SYSTEM RESPONSE
The University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The audit tested quarterly Project and Expenditure reports of the State and Local Fiscal Recovery Funds (SLFRF) program for the periods ending March 2023, December 2023, and June 2024. Project and Expenditure reports are prepared and submitted by the ND Office of Management and Budget.
Errors in key line items in all three quarterly Project and Expenditures Reports tested were identified. Key line items with errors included current period expenditures, cumulative expenditures, and current period obligations.
Current period expenditures reported on the March 2023 and December 2023 reports did not agree to the tracking spreadsheet used to prepare the report. The net unreconciled difference in current period expenditures for these quarters was $732,036. The reason for the difference included that OMB's own SLFRF expenditures were not reported in the proper period.
Cumulative expenditures reported by OMB for all three covered periods did not agree to the tracking spreadsheet used to prepare the report. The state's actual cumulative expenditures were not determined since changes or revisions can be reflected in the next Project and Expenditures report. However, cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130 while cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688. The basis of accounting used to prepare the SEFA varies amongst the agencies and universities; however, the state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report.
Current period obligations reported by OMB for the covered period ending June 30, 2024, totaled $93,696,726, which should have been $0. This error did not impact the cumulative obligation amount since OMB previously reported the state's SLFRF allotment was 100% obligated in the cumulative obligation amount for the covered period ending December 31, 2023.
CRITERIA
According to Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, states are required to submit quarterly Project and Expenditure Reports. The 2023 and 2024 Compliance Supplements indicate the following line items are key line items: current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure are key line items. In addition, report corrections cannot be made after the reporting deadline unless prompted by Treasury staff. Any changes or revisions will need to be reflected in the next Project and Expenditure report.
2 CFR 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the award occurs. In general, the activity pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards.
2 CFR 200.303(a) states that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
CAUSE
OMB manages State and Local Fiscal Recovery Funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures are incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds were included in the federal report for the period in which reimbursement to the agency occurred. In some cases, this resulted in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report. In addition, OMB's reporting process did not identify its own SLFRF expenditures in a timely manner. Lastly, OMB did not consistently utilize its tracking spreadsheet for reporting certain key line items.
EFFECT
State and Local Fiscal Recovery Funds (SLFRF) data reported to the U.S. Department of Treasury in quarterly Project and Expenditures Reports was inaccurate.
CONTEXT
In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of the majority of the funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. The remainder of the funds were obligated by the state legislature during the 68th Legislative Assembly, which included any turnback funds obligated in previous legislation.
North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota’s entire SLFRF allocation is dedicated to project expenditure category group 6 – Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 – Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives."
Cumulative expenditures reported by OMB for the covered period ending June 30, 2024, totaled $686,652,130. Cumulative expenditures reported by agencies and universities on SEFAs for the same period totaled $670,946,688; however, the basis of accounting used to prepare the SEFA varies amongst the agencies and universities. The state's cumulative expenditures are expected to reconcile to the state's SLFRF allocation in its final Project and Expenditure Report. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Finding 2022-035 was reported in the immediate prior year.
RECOMMENDATION
We recommend the Office of Management and Budget ensure quarterly Project and Expenditure Reports accurately report the State's SLFRF obligations and expenditures to the Department of Treasury.
OFFICE OF MANAGEMENT AND BUDGET RESPONSE
The Office of Management agrees with this finding, but will continue federal reporting based on the timing of reimbursement of expenditures to other state agencies for the duration of the SLFRF reporting period. OMB will ensure all expenditures of SFLRF funding are accurately included in the reports based on the period of reimbursement. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state’s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. To better track OMB expenditures of SLFRF moneys, which is a separate process from the reimbursement of other agencies, OMB will run specific expense reports for OMB agency expenditures to ensure all SLFRF expenses are reported in the proper period.
See “Management’s Response and Corrective Action” section of this report.
AUDITOR’S CONCLUDING COMMENTS
While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
CONDITION
We tested four infrastructure projects that used State and Local Fiscal Recovery Funds: one new construction project at Bismarck State College – Polytechnic Building, one renovation project at Minot State University – Hartnett Hall, and one new construction project and one renovation project at University of North Dakota - Airport Apron and Merrifield Hall, respectively. We noted three of the four infrastructure projects tested did not follow procurement rules for architect and Construction Management at-Risk (CMaR) services. We noted the following:
Bismarck State College - Polytechnic Building:
• The amount of the contract was $42,205,831 and questioned costs were $25,253,685.
• The CMaR selection committee was improperly composed as a registered engineer and a registered architect were unknown at the time of solicitation.
• The CMaR request for qualifications were improperly evaluated as a registered engineer and a registered architect did not evaluate the submittals.
Minot State University - Hartnett Hall:
• The amount of the contract was $23,738,195 and questioned costs were $22,575,329.
• Architect services were evaluated on a criteria item, understanding the project, which was not disclosed in the request for qualifications nor listed in N.D.C.C. There was no addendum issued.
• The CMaR selection committee was improperly composed after the request for qualifications was issued. A change was made to the selection committee which left it with no registered architect.
• The CMaR request for qualifications did not have all the required information in it; the number of persons to be included in the final list were not listed.
• The CMaR request for qualifications were improperly evaluated as a registered architect did not evaluate the submittals.
University of North Dakota - Merrifield Hall:
• The amount of the contract was $40,829,950 and questioned costs were $27,554,154.
• The CMaR selection committee was improperly composed as there was no registered engineer and the licensed contractor had an inactive license during part or all of their selection committee duties.
• The CMaR request for proposal did not have all the required information in it. The selection committee members were not listed, the evaluating criteria and relative weight of each were not listed, and the number of persons to be included in the final list were not listed.
• The CMaR request for proposals were improperly evaluated as a registered engineer did not evaluate the submittals, the licensed contractor had an inactive license during part or all of their selection committee duties – which includes evaluations, and the submittals were not evaluated on all of the required criteria – the person’s compliance with state and federal law was not evaluated.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
N.D.C.C. 54-44.7-03, subsection 5, states in part, the agency selection committee shall evaluate each of the persons or firms interviewed on the basis of the following criteria:
a. Past performance.
b. The ability of professional personnel.
c. Willingness to meet time and budget requirements.
d. Location, with higher priority given to firms headquartered in North Dakota.
e. Recent, current, and projected workloads of the persons or firms.
f. Related experience on similar projects.
g. Recent and current work for the agency
N.D.C.C. 48-01.2-20, subsection 1, states, A governing body electing to utilize a construction management at-risk delivery process for a proposed public improvement shall create a selection committee composed of:
a. An administrative individual from the governing body.
b. A registered architect.
c. A registered engineer.
d. A licensed contractor.
N.D.C.C. 48-01.2-20, subsection 3, lists fourteen items that must be established as content in the request for qualifications, which includes the listing of selection committee members, the evaluating criteria and relative weight of each, and the number of persons to be included in the final list.
N.D.C.C. 48-01.2-20, subsections 5 and 6, states that the selection committee needs to determine the appropriate evaluation criteria for the eight qualification criteria items listed. The selection committee shall evaluate each submission based on the qualification criteria items listed in subsection 5, which includes the person's compliance with state and federal law.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
Bismarck State College:
• There may have been a slight confusion of what and which duties the selection committee was required to perform.
Minot State University:
• They are unsure why the additional criteria was used to evaluate the architect request for qualifications.
• The selection committee changed after its initial composition leaving the selection committee with no registered architect.
• The number of persons to be included in the final list was inadvertently overlooked.
University of North Dakota:
• They thought that a registered engineer would fulfill the selection committee requirement; however, their registered engineer was registered in Nebraska not North Dakota. The licensed contractor had a lapse in an active license for all or part of their selection committee duties.
• The required information in the request for proposal and the proper evaluating criteria was an oversight.
EFFECT
By not following N.D.C.C. for the architect and CMaR services, these service contracts may have been awarded incorrectly.
CONTEXT
Bismarck State College, Minot State University and the University of North Dakota were allocated $35 million, $25 million, and $55 million, respectively, from the state fiscal recovery fund for specific renovation and construction projects. These institutions were allowed to enter into contracts to procure goods and services with only a subset of federal procurement requirements being applicable to this type of federal funding - recipients must adhere to the same policies and procedures they use for non-federal procurements. These three institutions were allocated a total $115 million from the state fiscal recovery fund and improperly awarded $106.8 million in contracts due to not adhering to procurement rules. $75.4 million was spent on these improperly awarded contracts during our audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that Bismarck State College, Minot State University and the University of North Dakota update their procedures to review and adhere to both the architect and Construction Management at-Risk selection processes to ensure compliance with the N.D.C.C. surrounding procurement for construction projects.
UNIVERSITY SYSTEM RESPONSE
Bismarck State College agrees with the recommendation.
Minot State University agrees with the recommendation.
University of North Dakota agrees with the recommendation.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The University of North Dakota did not follow procurement guidelines in the Research and Development Cluster. We tested 40 items total and 18 of those were for the University of North Dakota. We found two issues (11%) and $115,258 in questioned costs for those two errors. The errors were comprised of the following:
• No documentation was provided to ensure the proper procurement was completed for the purchase of a software license for $116,431. During our audit period, the University of North Dakota expended $39,928 of federal grant funds for the software license.
• Two pieces of equipment were purchased totaling $100,440 and formal bidding was not competed. During the audit period, $75,330 was expended with federal grant funds for the equipment.
When projected against the entire population, the additional likely questioned cost totaled $489,720.
CRITERIA
Uniform Guidance 2 Code of Federal Regulations (CFR) Part 200.317, states in part that when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds.
2 CFR 200.318 Ii) states in part that the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price.
North Dakota University System Procedure 803.1 states in part that for purchases of $100,000 and over must be purchased using formal sealed bids or a request for proposal. Solicitations must be posted using SPO online with appropriate state bidders list.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not follow procurement requirements when purchasing property and services.
EFFECT
Without following federal and state procurement rules, the University of North Dakota cannot ensure they are properly purchasing property and services at the best available price.
CONTEXT
The University of North Dakota had purchases requiring procurement to vendors for research and development related property and services totaling $6,448,341 in expenditures during fiscal years 2023 and 2024.The University of North Dakota did not properly procure two items tested with $115,258 spent during the audit period. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota properly procure property and services in compliance with federal and state regulations and North Dakota University System procurement requirements.
UNIVERSITY SYSTEM RESPONSE
The University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
The University of North Dakota has federally funded equipment that is not being properly identified with the corresponding major equipment asset tags on the asset. We tested a total of 21 capital assets and 10 of those were at the University of North Dakota where we found 5 assets without any major equipment identification tags on them for an error rate of 50%.
CRITERIA
2 CFR section 200.313(d)(3) states in part that a control system must be in place to ensure safeguards for preventing property loss, damage, or theft.
2 CFR section 200.313(b) states in part that a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures.
The University of North Dakota Capital Asset policy states in part that the campus department is responsible for using correct chart field when acquiring all assets, tagging and tracking their major equipment, and completing annual inventory of all major equipment.
CAUSE
The departments and/or principal investigator (PI) purchasing the equipment did not correctly attach the major equipment tags to the asset as required by the University of North Dakota's Capital Asset policy.
EFFECT
There is noncompliance with federal rules and regulations as well as the University of North Dakota's Capital Asset policy, thus increasing the risk that federally funded equipment is not properly identified.
CONTEXT
For the audit period, the Research and Development Cluster had 207 equipment asset additions ($9,958,360). All the issues noted originated from one single department at the University of North Dakota. The insufficient tagging of capital asset deviations seems to be an isolated incident contained to this department, which in total for our audit period had 16 new additions totaling $419,060. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota ensure federally funded equipment is properly tagged.
UNIVERSITY SYSTEM RESPONSE
The University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
North Dakota State University and the University of North Dakota were not certifying payroll expenditures by the deadlines stated in their payroll certification policies. We noted 7 out of 40 payroll checks tested had payroll expenditures for that semester that wasn't certified in a timely manner. This resulted in unapproved payroll expenditures of $74,051 being charged to the Research and Development Cluster. When projected against the entire population, the additional likely questioned cost totaled $13,998,284.
CRITERIA
In 2 CFR 200.430 compensation-personal services part (g) (i) when discussing Standards for Documentation of Personnel Expenses states in part, “be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated."
The North Dakota State University's overview of Effort Reporting states in part that North Dakota State University has three effort reporting periods which follow the University’s semester schedule: August 16 – December 31, January 1 – May 15, May 16 – August 15. Approximately 15 days after each effort reporting period, the Grant and Contract Office will generate effort certification reports which are to be reviewed, signed, and returned within 30 days after the department receives them.
The University of North Dakota's Sponsored Project Payroll Confirmation policy states in part that at the end of each semester, after payroll posts (on or about January 15, May 31, and August 31) compliance coordinators (CC) will receive an email notifying them the pre review period has opened. It goes on to state to be considered complete, the Project Payroll Statement (PPS) must be:
• Pre-review by the primary CC or other non-primary CC as assigned.
• Certified by the project principal investigator or their delegate as assigned.
Only after both steps are accomplished is the PPS considered complete. If statements are not completed by 30 days after the end of 90-day certification period, Grants & Contracts will transfer federal salary charges corresponding to the incomplete statement to a department fund.
The University of North Dakota's 'Guidelines for Effort Commitment & Payroll Certification Associated with Sponsored Projects' states in part that in general, payroll must be certified within 90 days of the date on which the certification window opens. Payroll must be certified on a semester basis.
CAUSE
Principal Investigators (PI's) are not understanding the requirements per the North Dakota State University and University of North Dakota policy which state a specific time period in which this task of certifying the payroll should be completed.
EFFECT
Without timely certification of payroll expenses by the Principal Investigator (PI), there is the potential for erroneous payroll amounts charged to a grant, unallowed payroll amounts charged to a grant, and/or payroll expense charged to the wrong grant, and not detected until it's too late to be corrected.
CONTEXT
North Dakota State University and the University of North Dakota are not certifying payroll expenses by the deadlines stated in their payroll certification policies. Total payroll expenditures for our audit period ($98,503,735) make up a significant portion of all Research and Development Cluster program expenses ($220,862,918) and thus these late payroll certification issues are a critical noncompliance deviation. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the North Dakota State University and the University of North Dakota certify their federal payroll expenses in a timely matter to provide reasonable assurance the amounts are accurate, allowable, and properly allocated to the specific project/grant.
UNIVERSITY SYSTEM RESPONSE
North Dakota State University agrees with the finding.
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.
CONDITION
In the 26 subrecipient awards tested, we found that the University of North Dakota did not sufficiently assess risk for 21 of those. Of the 21 subrecipient awards that were not sufficiently risk assessed, the following was noted:
• There was no risk assessment completed for 12 subaward agreements (46%).
• Risk assessment forms were completed after 9 subaward agreements had been issued (35%).
CRITERIA
2 CFR 200.332 (c) states in part:
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
During our audit period, University of North Dakota's operating practices stated that a risk assessment was to be completed on each subrecipient entity before a subaward agreement is issued. Institutional, project and threshold questions on the form assess risk of a subrecipient regardless of funding source. The risk assessment will determine whether a risk mitigation strategy should be developed and whether additional requirements should be imposed on the subrecipient.
Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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 statues, regulations, and the terms and conditions of the Federal award.
CAUSE
University of North Dakota did not have adequate procedures in place to properly monitor subrecipients.
EFFECT
The University of North Dakota took on additional risk with each subrecipient by not adequately assessing the risk. Each may have a high risk of noncompliance with federal requirements. Additionally, evaluation of risk plays a role in determining the appropriate subrecipient monitoring activities for each subrecipient. As risk assessments were not completed in a timely manner, risk-appropriate monitoring activities may not have been performed.
CONTEXT
The University of North Dakota had payments to subrecipients that totaled $25,929,781 during fiscal years 2023 and 2024. The University of North Dakota did not properly complete risk assessments for 21 out of 26 subaward agreements tested. Where sampling was performed, the audit used a non-statistical sampling method.
IDENTIFICATION AS A REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the University of North Dakota implement procedures to ensure risk assessments forms are completed prior the grant award being issued to provide assurance that appropriate subrecipient monitoring will be performed.
UNIVERSITY SYSTEM RESPONSE
University of North Dakota agrees with the finding.
See “Management’s Response and Corrective Action” section of this report.